Standard Chartered bank announced its commitment to support the Paris agreement on climate change by revealing its plans to stop financing coal-fired power plants anywhere in the world. According to a statement released by the London-based bank, the decision was made after “detailed consultation with a range of stakeholders”.
The bank said environmental degradation, extreme weather and rising seas are among the climate change legacies left by burning coal. The bank however noted that its existing commitments, are excluded from its new policy on coal energy.
HSBC Holdings, Societe Generale, and Deutsche Bank are banks that have made similar pledges. Japanese lenders, who are among the biggest funders of coal projects, have also began to embrace more climate friendly policies.
Research published by Market Forces, a company that lobbies financial firms and government on environmental issues, reveals Standard Chartered has loaned at least $1.8 billion to coal power, including $820 million to projects that added 10.6GW of additional coal power capacity.
According to Julien Vincent, an executive director at Market Forces, “the fact that Standard Chartered was involved in syndicates for three coal power plants in Vietnam prior to this update makes it even more impactful. That’s three dirty coal projects, which would produce almost 700 million tons of carbon dioxide per year, that will now need to look elsewhere for finance”.
The United States Natural Resources Defence Council (NRDC) notes that even with an increase in the number of companies and cities that have pledged to phase out coal as part of efforts to reach targets set in the Paris agreement, financing from Group of 20 countries for global coal projects was $13 billion in 2017- a five-year high.
Han Chen, a climate advocate at NRDC, said “the financial incentive to phase out coal is clear to investors. It is irresponsible to use the money of clients for coal related investments, knowing that coal is one of the key contributors to climate change and knowing coal plants are less and less competitive with other energy sources such as solar and wind, and therefore less profitable”.
A report by Arabella Advisors notes that the broader global movement to divest from all fossil fuels has gathered momentum, with nearly 1,000 institutional investors with $6.2 trillion in assets under management, committing to stop financing polluting fuels.