Cutting off bank finance to coal plant developers
Urgewald, in partnership with Les Amis de la Terre, BankTrack, Re:Common, and Rainforest Action Network
Coal-fired power generation is the single greatest source of CO2 emissions. With The Paris Agreement from 2015, governments agreed to reduce CO2 emissions in order to limit global temperature rise to well below 2°C, and to strive for 1.5°C. Yet, commercial banks continue to finance the expansion of the global coal industry, thereby jeopardizing The Paris Agreement. European and US banks play a central role in mobilizing finance for the global coal industry.
With this project, urgewald and four partners launch a campaign targeting European and US banks for their role in financing the global coal industry. The goal is to cut off financial flows to the pipeline of new coal projects and to move banks on both sides of the Atlantic to adopt policies that exclude investments in the global coal industry.
Commercial banks are key finance providers to the global coal industry, both through direct lending, but also through underwriting of bond and share issues for coal companies. Research by the project partners shows that this financing is highly concentrated; 75 pct. of bank financing to the coal industry is provided by 25 international banks, primarily based in Europe and the US.
To hinder the flow of finance from commercial banks to new coal-fired power capacity, urgewald and partners will launch a two-year campaign targeting the relevant banks in Europe and US. The campaign contains several activities, e.g., dialogue with the banks; engagement with the bank shareholders; public campaigns; and campaigns targeting specific projects.
The project will be implemented by a coalition of five NGOs: urgewald (Germany), Les Amis de la Terre (France), BankTrack (Netherlands), Re:Common (Italy) and Rainforest Action Network (US). The objectives of the campaign are:
- European and US banks adopt policies excluding financing of new coal-fired capacity, thus setting a precedent that can be used to achieve policy gains with banks in other regions.
- The implementation of the pipeline of new coal power projects is sufficiently slowed down and curtailed to avoid developments that already in the near future would put global warming on a 4°C pathway.