Global banks and investors undermining Paris climate agreement goals: Reports

On the eve of the historic Paris Climate Change Agreement‘s second anniversary, two new reports on Monday revealed how large banks and investors are actively undermining the Paris climate goals by financing new coal-fired power plants.

Investors from India account for six per cent of the institutional investments in coal plant developers.

The reports provide data exposing how between January 2014 and September 2017 big banks provided $630 billion in financing to the 120 top coal plant developers, and major institutional investors are currently investing close to $140 billion in the same companies.

“With the Paris Agreement now in its second year, there is no excuse for banks and investors to support companies that are planning to build new coal-fired power plants, which fly in the face of the international commitments to limit global warming to 1.5 (degrees) C,” said Rainforest Action Network Senior Campaigner Jason Disterhoft in a statement.

“The bottom-line is that we need an immediate halt to all coal infrastructure investment.” The reports, ‘Banks vs. the Paris Agreement’ and ‘Investors vs. the Paris Agreement’, launched by Rainforest Action Network, BankTrack, Urgewald, Friends of the Earth France and Re:Common at the Climate Finance Day in Paris, reports examine banks’ and investors’ involvement with the world’s top 120 coal plant developers.

These companies are responsible for two-thirds of the new coal-fired power stations planned around the globe and aim to build over 550,000 MW — an amount equal to the combined coal fleets of India, the US and Germany.

The ‘Banks vs. the Paris Agreement’ report says bank financing of these companies in the period from January 2014 to September 2017 involved $630 billion in lending and underwriting, with Chinese and Japanese banks responsible for 68 per cent of the total.

In the two years since the Paris Agreement was signed, banks have provided $275 billion to the top 120 coal plant developers.

Seventeen of the top 20 underwriters for bond and share issues of coal plant developers are Chinese banks, led by the Industrial and Commercial Bank of China which provided over $33 billion to coal plant developers through underwriting.

“We have seen China take important steps to begin reducing its domestic coal use. It now needs to rein in the money going to Chinese coal expansion overseas. If China wants to have a claim to climate leadership, it needs to stop the huge financial flows from its banks to coal plant developers,” said Yann Louvel, Climate and Energy Coordinator at BankTrack.

The report ‘Investors vs the Paris Agreement’ identified 1,455 institutional investors with overall investments of almost $140 billion in the top 120 coal plant developers.

The world’s largest investor in coal plant developers is the US-based investment giant BlackRock, which holds shares and bonds worth $11.5 billion in these companies.

It’s followed by Japan’s Government Pension Investment Fund with investments of $7 billion and US investment manager Vanguard, which holds investments of $5.7 billion in coal power expansion companies.

All in all, investors from the US account for 37 per cent of the institutional investments in coal plant developers.

Next in line are the EU and Japanese investors (13 per cent each), Malaysian investors (nine per cent), Chinese investors (seven per cent) and Indian investors (six per cent).

On Tuesday, two years after the Paris Agreement was adopted, heads of state, governments, civil society and the private sector are gathering in Paris to drive forward climate action.

Convened at the request of French President Emmanuel Macron, World Bank President Jim Kim and UN Secretary-General AntAnio Guterres, the One Planet Summit is designed to launch new initiatives that assist in ramping up financial flows to developing nations as they implement their climate action plans under the Paris Agreement.

Britain-based charity Christian Aid said finances for the poorer countries were essential if the UN accord was to succeed.

“It’s great that President Macron is getting the world together to celebrate the two-year anniversary of the Paris Agreement but its success won’t lie in how well countries celebrate the day it was struck,” Christian Aid’s International Climate Lead Mohamed Adow said in a statement.

“To really honour it we need to see countries recalibrating their economies in line with the Agreement’s long term goal of decarbonising the world economy by 2050,” he added.

Source: IANS