Standard Chartered Plc said it will stop financing new coal-fired power plants anywhere in the world as part of its commitment to supporting the Paris Agreement on climate change.
The move follows “detailed consultation with a range of stakeholders,” according to a statement Tuesday from the London-based bank. Environmental degradation, extreme weather and rising seas are among the climate change legacies left by burning coal, it read.
Standard Chartered said its existing commitments were excluded from its new policy on coal energy. It currently has 14 project financing facilities in seven markets, which fund coal-power stations. A spokesman for the bank declined to say how much money it currently held in coal projects.
HSBC Holdings Plc, Societe Generale SA and Deutsche Bank AG are among banks which have made similar pledges. Japanese lenders, among the biggest funders of coal projects, have also begun to shift towards more climate-friendly policies.
Since 2010, Standard Chartered has loaned at least $1.8 billion to coal power, including $820 million to projects that added 10.6 gigawatts of additional coal power capacity, according to research by Market Forces, which lobbies financial firms and governments on environmental issues.
Standard Chartered’s initiative marks an advance on Japanese and other lenders active in Southeast Asia, according to Julien Vincent, an executive director at Market Forces,
“The fact that Standard Chartered was involved in syndicates for three coal power pants in Vietnam prior to this update makes it even more impactful,” Vincent said. “That’s three dirty coal projects, which would produce almost 700 million tonnes of CO2 per year, that will now need to look elsewhere for finance.”
Although increasing numbers of companies and cities have pledged to phase out coal as part of efforts to reach targets set out in the Paris Agreement, financing from G20 countries for international coal projects was at least $13 billion in 2017, a five year high, according to research from the Natural Resources Defense Council.
“The financial incentive to phase out coal is clear to investors,” Han Chen, a climate advocate at the NRDC, said in a recent blog post. “It is irresponsible to use the money of clients for coal-related infrastructure investments, knowing that coal is one of the key contributors to climate change, and also knowing that coal plants are less and less competitive with other energy sources such as solar and wind, and therefore less profitable.”
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 get out of the most polluting fuels, according to a recent report from Arabella Advisors.
Ireland became the first country in the world to make the pledge while New York City is the largest global city to make the commitment. The insurance sector is at the forefront of the movement, having promised to get out of over $3 trillion in fossil fuel assets, according to the report.
“Other banks will hopefully use this as an impetus to follow suit: HSBC published an improved policy on coal earlier in the year, but so far it still falls short of excluding project finance for coal-fired power plants globally,” said Sonia Hierzig, senior projects manager at ShareAction.