Tuesday 4 May 2021 1:49 pm

UK banks provided over $50bn in financing for coal-exposed firms from 2018 to 2020

The UK’s biggest banks provided $56bn worth of financing for firms involved in the coal industry between 2018 and 2020, new research today has found.

Of the top five banks exposed to the sector, Barclays provided by far the most financing to firms on the Global Coal Exit list, with $27bn.

HSBC and Standard Chartered were second and third on the list, providing $15bn and $10bn respectively. 

Barclays and HSBC said that they had not provided any financing for new coal power plants since 2019 and 2018 respectively. Standard Chartered said it did not provide direct funding for such projects.

The report comes the day before Barclays is due to face a second consecutive shareholder resolution concerning its position as Europe’s largest fossil fuel financier at its AGM.

According to the data, which was compiled by NGOs Reclaim Finance and Urgewald, the City of London is the world’s third biggest coal financing centre.

That’s despite the UK’s role as the co-chair of the global Powering Past Coal alliance, a group dedicated to phasing out power plants run on the fossil fuel.

Paddy McCully, energy transition analyst at Reclaim Finance, concluded: “The City of London has perfectly summed up the hollowness of net-zero commitments, when not accompanied by time-bound, tangible measures. 

“If the UK is not to remain a motor of pollution across the world, its banks and investors need to rapidly establish red lines around coal expansion and follow through with divestment whenever they are breached. Fail to do so, and all the net-zero commitments in the world won’t be enough to restore their tarnished reputation on climate.”

The new figures come as the UK prepares to host the UN’s flagship climate conference COP26 in Glasgow in November.

Last month it announced that it would now cut emissions by 78 per cent on 1990 levels by 2035, in line with the recommendations of the Committee on Climate Change (CCC).

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It has also stopped providing financing to global coal projects, a move that a number of other countries have recently mimicked. 

In response to the report, Barclays said in a statement: “The majority of the period covered in this research took place before we set our net zero ambition and before we started work to align our financing portfolio to the goals of the Paris Agreement in March 2020.

“Our Jan 2019 Energy and Climate Change Statement outlined our initial restrictions and since 2019 we have committed to not provide any project finance for the construction or material expansion of coal-fired power stations or the development of greenfield thermal coal mines anywhere in the world. 

“Last year, in recognition of the fact that Barclays should go further in this area, we have also committed to not provide general corporate financing that is specified as being for new or expanded coal mining or coal-fired power plant development, and have introduced tightened restrictions on financing of thermal coal mining and power clients. 

“In particular, we set a limit on the amount of revenue which any client may derive from thermal coal mining and/or power, progressively decreasing from 50 per cent now to 30 per cent by 2025, to 10 per cent by 2030.

An HSBC Spokesperson said: ‘Our policies prohibit the financing of new thermal coal mines and new customers dependent on thermal coal mining, and we have not provided project finance for new coal-fired power plants since early 2018. 

“We will publish by end 2021 a plan to phase out the financing of all coal-fired power and thermal coal mining by 2030 in markets in the European Union/Organisation for Economic Cooperation and Development, and by 2040 in other markets.  

Standard Chartered said: “We have made major strides in our coal policy over the past few years, we continue to review our positions in light of stakeholder feedback and intend to remain leaders in articulating a path to net zero financed emissions by 2050. 

“We are committed to detailed transparency on our transition strategy and plan to put it to a shareholder advisory vote in 2022.”

The global coal list is a database of companies with significant coal-related earnings.