Credit Agricole Group, one of the world’s leading commercial banks, is the latest to announce it will end business ties with companies that rely on coal revenues.
That’s a decision with the potential for significant impact, given the long reach of the company based in suburban Paris. Credit Agricole Group is the top asset manager in Europe and operates in 47 different countries, including much of Eastern Europe and the Middle East and North Africa (MENA) nations. It’s the top real estate investor in France and boasts of being the top lender behind the French economy.
A new medium-term plan through 2022 acknowledges green finance as a driver of the company’s growth and begins with plans to hold all of Agricole’s own entities to a climate strategy aligned with the Paris Agreement. An independent certification process and report are expected next year.
Yet it’s what the bank plans in its external relationships that’s really turning some heads. There will be no new business with companies that are planning or developing coal energy, or for those who rely on coal interests for more than 25 percent of their revenues, unless they’ve already announced plans to end coal or intend to do so by 2021. The company will assign transition ratings to its largest corporate customers in order to structure the process, and to initiate their engagement on the clients’ energy transition roadmaps.
Coal will be phased out of Agricole portfolios in Europe by 2030, in China by 2040 and everywhere in 2050.
The Group “intends to be the European leader in responsible investment,” it said in its statement, and part of that vision means it will be doubling the size of its green loans portfolio to €13 billion by 2022. It’s already rated in one report as a top performer on low levels of fossil fuel investment, and in France alone, Credit Agricole expects to finance one of every three renewable energy projects.
The policy covering European Union and Organization for Economic Co-operation and Development (OECD) nations puts European utility companies in the financial crosshairs. They potentially include Germany’s RWE and Uniper, Czech Republic’s CEZ, Spain’s Endesa and Poland’s PGE, above, according to industry analysts.
“These five European utilities … may be forced to revise their coal development plans as the finance community continues to pile on the pressure to shift to urgently needed low-carbon alternatives,” warned the Institute for Energy Economics and Financial Analysis (IEEFA), based in the United States.
Agricole’s decision is the latest among global banks, insurers and other financial institutions that are responding to both the climate crisis and their shareholder demands. “Global capital is fleeing the thermal coal sector. This is no passing fad,” IEEFA said in a February 2019 report.
It’s been the trend since World Bank first moved to leave coal behind in 2013. The COP 24 conference in Poland in December saw 454 investors representing more than $32 trillion in assets jointly sign the 2018 Global Investor Statement to Governments on Climate Change, which also called for a coal phaseout.
“The global shift to clean energy is under way, but much more needs to be done by governments to accelerate the low carbon transition and to improve the resilience of our economy, society and the financial system to climate risks,” the letter said.
A database on companies and coal divestment is available at the Global Coal Exit List.
