European investors hold shares worth at least $65 million in major coal firms across China, India, the United States, Indonesia and South Africa within funds designated as “promoting environmental and social” goals under EU rules, an analysis by Climate Home and media partners found.

Taken together, these companies emit around 1,393 million tonnes of carbon dioxide (CO2) into the atmosphere every year, putting them among the world’s top five polluters if they were a country.

The investments are owned by major financial firms including BlackRock, Goldman Sachs and Fideuram, a subsidiary of Italy’s largest bank Intesa Sanpaolo. Most firms analysed are signatories of the Glasgow Financial Alliance for Net Zero (GFANZ), whose members pledge to align their portfolios with climate-friendly investment.

The asset managers told Climate Home their coal holdings do not contradict EU green policies or the 2015 Paris Agreement to tackle climate change.

At the COP26 UN climate summit in Glasgow in 2021, countries agreed for the first time to accelerate efforts “towards the phase-down of unabated coal power”. “Unabated” means power produced using coal without any technology to capture, store or use the planet-heating CO2 emitted during the process.

But rather than shrinking, global coal capacity has grown since the signing of the Glasgow Climate Pact with a fleet of new coal plants firing up their boilers, primarily in China, India and Indonesia. Coal miners in those countries have also boosted their operations to keep up with the increasing demand.

European leaders have heavily opposed this, with EU president Ursula von der Leyen saying the bloc is “very worried” about coal expansion in China.

“Light green” funds

The investments analysed by Climate Home have been made by funds classified under Article 8 of the EU’s Sustainable Finance Disclosure Regulation (SFDR), which the European Commission hoped would discourage greenwashing and promote sustainable investments when it was introduced in 2021.

Article 8 – known as ‘light green’ – refers broadly to a fund that has “environmental and social characteristics”, while the ‘dark green’ Article 9 refers more directly to sustainability.

The rules were also intended to offer members of the public more clarity on where asset managers invest their money and enable them to make an informed decision on whether they want their savings or pension pots to prop up climate-harming activities.

Workers shovel coal onto a truck at a coal yard near a coal mine in Huating, Gansu province, China. REUTERS/Thomas Peter

But a group of European financial market watchdogs warned this month the rules are having the opposite effect and called for an overhaul of the system.

“Status as ‘Article 8’ or ‘Article 9’ products have been used since the outset in marketing material as ‘quality labels’ for sustainability, consequently posing greenwashing and mis-selling risks,” they said in a joint opinion to the European Commission.

“The general public is still being misled when it comes to sustainable funds,” Lara Cuvelier, a sustainable investments campaigner at Reclaim Finance, told Climate Home. “The regulations are very weak and there is no clear criteria as to what can or cannot be included. It’s still in the hands of investors to decide that for themselves.”

Funding coal expansion

Climate Home identified investments in the biggest-polluting companies in the coal sector as part of a wider investigation led by Voxeurope, which tracked holdings by funds that disclose information under the EU’s sustainable finance directive.

These “green” funds include investments in mining companies like Coal India and China Shenhua – the respective countries’ top coal producers – and Indonesia’s Adaro Energy, as well as in giant coal power producers such as NTPC in India and China Resources Power Holdings.

All of these companies are planning large-scale expansions of their coal output, according to the influential Global Coal Exit List compiled by German NGO Urgewald.

No new coal mines, mine extensions or new unabated coal plants are needed if the world is to reach net zero emissions in the energy sector by 2050 and keep the 1.5C warming limit of the Paris Agreement “within reach”, according to projections by the International Energy Agency (IEA).

State-owned Coal India is the world’s largest coal producer, with fast-growing output topping 773 million tonnes in the latest financial year. It is targeting 1 billion tonnes of annual coal production by 2025-26 by opening new mines and expanding dozens of existing ones.

IEA calls for next national climate plans to target coal phase-down

In its latest annual report, Coal India cited “pressure of international bodies like [the] UN to comply with [the] Paris Agreement” as one of the main threats to its business. Coal India’s share value has more than doubled over the last 12 months on the back of stronger coal demand in the country, as extreme heatwaves have fuelled the use of air-conditioning among other factors.

State-run mining and energy giant China Shenhua plans to invest over $1 billion in 2024 to expand its fleet of coal power stations and build new coal mines. “We will keep a close eye on climate change to improve the clean and efficient use of coal,” its latest annual report said.

Big investors

The funds with stakes in those coal-heavy companies are managed by Fideuram, an arm of Italy’s largest bank Intesa Sanpaolo, US-based AllianceBernstein and Mercer, a subsidiary of the world’s largest insurance broker Marsh McLennan.

Coal investments in Fideuram’s Article 8 funds – worth at least $16 million – also appear to breach the company’s own coal exclusion policy, designed to rule out holding shares in certain coal firms.

Two of its flagship “emerging markets” funds claim to promote environmental and social characteristics including “climate change prevention” and the “reduction of carbon emissions”, according to information disclosed under EU rules. To achieve their ‘green’ objectives, the funds claim to exclude any investment in companies “deriving at least 25% of their revenues” from the extraction, production and distribution of electricity connected with coal.

But Climate Home found the funds include investments in at least six major coal companies exclusively or primarily involved in coal mining or power generation.

A coal-fired power plant under construction in Shenmu, Shaanxi province, China, in November 2023. REUTERS/Ella Cao

Fideuram did not answer Climate Home’s questions about the funds’ apparent breach of their own policy. But a company spokesperson said in a written statement that “investments in sectors with high-carbon emissions do not conflict with the objectives of the SFDR, which concern the transparency of sustainability investments, nor with the Paris Agreement, which promotes a transition to a low-carbon economy”.

A spokesperson for Mercer said its Article 8 fund, which holds shares in NTPC and China Resources Power Holdings. has an exclusion policy to avoid investing in companies that generate more than 1% of their revenue from thermal coal extraction. “Based on the data provided by ISS [a provider of environmental ratings], no groups involved breach the 1% threshold, and therefore, the fund is not in violation of its SFDR commitments,” they added.

AllianceBernstein did not respond to a request for comment.

Coal-hungry steelmaking

While excluding investments in so-called thermal coal used for electricity generation, several ‘green’ funds put their money in companies producing coking coal – or metallurgical (met) coal – which is used to make steel.

Goldman Sachs’ Article 8 funds hold shares worth several million dollars in Jastrzebska Spolka Weglowa, Europe’s largest coking coal producer, and Shanxi Meijin in China. BlackRock offers exchange-traded funds (ETFs) tracking indexes that include investments in SunCoke, a leading met coal producer in the US and Brazil, Alabama-based Warrior Met and Shanxi Meijin.

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Reclaim Finance’s Cuvelier said that, up until recently, the focus has been on pushing thermal coal out of investor portfolios because the alternatives to met coal in steel production were “less developed”.

“There are now increasing calls on financial institutions to cover met coal as well in their exclusion policies as alternatives exist,” she added. “It’s becoming very important because there are new projects under development that should be avoided”.

A spokesperson for BlackRock said: “As a fiduciary, we are focused on providing our clients with choice to meet their investment objectives. Our fund prospectuses and supporting material provide transparency as to the methodology and investment objectives of each fund”.

Goldman Sachs did not reply to a request for comment.

Reforms on the horizon

At the end of 2022, the European Commission began a review of the SFDR’s application with a view to updating its sustainable finance rules.

Future reforms may include changes to the ways funds are categorised. “There are persistent concerns that the current market use of the SFDR as a labelling scheme might lead to risks of greenwashing… partly because the existing concepts and definitions in the regulation were not conceived for that purpose,” the Commission said in a consultation paper released last year.

It also indicated that the existing categories under Articles 8 and 9 could either be better defined or scrapped entirely and replaced with a different system. The new Commission, yet to be formed following last month’s elections, will decide if and how to move forward with the reform process.

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Separately, the EU’s market supervisory authority, ESMA, has recently issued guidelines to prevent funds from misusing words like “sustainability”, “ESG” – environmental, social and governance – or “Paris-aligned” in their names. A handful of the funds with coal investments analysed by Climate Home have used those labels.

Under the new guidelines, asset managers wanting to slap climate-friendly labels on their funds will have to exclude companies that derive more than a certain percentage of revenues from fossil fuels.

Climate Home produced this article with data analysis contributions from Stefano Valentino (Bertha Fellow 2024) and Giorgio Michalopoulos. This article is part of an investigation coordinated by Voxeurop and European Investigative Collaborations with the support of the Bertha Challenge fellowship.

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The G7’s top leaders convene in Italy this week as the world swelters through its 12th hottest month on record. One key issue that needs to be addressed is G7 members’ continued bankrolling of coal, from fossil fuel subsidies to public financing and private investments.

The latest evidence shows that the world’s largest banks – the majority of which are headquartered in G7 nations – continue to pour fuel on the fire of coal expansion.

As the G7 summit approaches, there is a chance for countries to match their rhetoric with action. It is not enough for governments and regulators to “call on” private finance to end their support for coal power. The continued financing of coal by the private sector shows that countries must take concrete steps to implement policies that stem the global flow of funds that fuel the expansion of the coal industry and redirect them to clean energy investments.  

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While attention is often directed at public fossil fuel subsidies for coal (which are a problem), the billions of dollars in commercial financing for the coal industry’s expansion cannot be ignored. Commercial banks provided a staggering $470 billion to the coal industry between 2021 and 2023 – money that could have otherwise been channelled into clean energy investments, grid infrastructure improvements, and energy efficiency. 

And the majority of this financing comes from financial institutions headquartered in G7 countries. Collectively, these banks provided $101 billion for coal development in the form of loans and facilitated bonds between 2021 and 2023.  

Worst offenders: US and Japan

Topping the list of offenders are US and Japanese banks, which are the largest coal lenders in the world. Bank of America, actually increased its funding of the coal industry by 30% between 2016 and 2023. It provided a whopping $6 billion in loans and facilitation of capital market issuances to the coal industry in the last three years. For perspective, $6 billion is the size of the entire GDP of the Maldives.

Japanese banks are not faring better.  Coal financing between 2021 and 2023 remained dominated by its megabanks, Mizuho ($8.1 billion), MUFG ($6.1 billion) and SMBC ($4.7 billion).  

Estimates suggest that the absolute greenhouse gas emissions associated with the activities financed by commercial banks in G7 countries are more than the combined emissions of Germany, Italy, the UK, and France. While banks do not directly produce all these emissions, they are borne out of their lending and investment activities of companies that they support.  

No shortage of public money to pay for a just energy transition

The ironic cherry on top is that this amount provided by commercial banks in G7 countries to the coal industry is more than twice the total pledged by the G7-led International Partners Group (IPG) to support the Just Energy Transition Partnerships (JETPs), an intergovernmental initiative intended to provide technical assistance and financial resources to help developing countries with their clean energy transitions. 

Coal phaseout unclear

Nor is the G7 showing great leadership when it comes to their own coal phaseout plans. The US alone still has over 200 gigawatts (GW) of remaining operational coal capacity alone. While this has been falling, there are also signs that this decline is stalling – 200 GW is more than the entire coal operating capacity of all the JETP recipient countries. And Japan has no clear coal phaseout plan despite its commitment.  

This shows that the capital required for the energy transition is available, but just poorly allocated. Financial regulations, such as stricter capital requirements and outright prohibitions, play a crucial role in redirecting capital and investments towards the energy transition. This must include setting international standards to stem the flow of funds towards the continued expansion of the coal industry and restrict financing to coal developers that continue to contribute to environmental degradation and air pollution.  

Financial regulation

The Italian presidency of the G7 2024 has a responsibility to prioritise climate-forward action across different sectors, including financial regulation. G7 Central Banks need to keep up the pressure on keeping climate action at the forefront of negotiations, and call for more international coordination and standard setting. 

Even if the G7 achieves its coal exit goal by the “first half of the 2030s”, this timeline falls short of what scientists say is necessary to limit global warming to 1.5°C, a critical threshold to avoid the most catastrophic impacts of climate change.

As UN Secretary-General Antonio Guterres said last week, “We are in control of the wheel that takes us off the highway to climate hell.” Individual G7 members must take an introspective look at changing outdated policies to adopt strong, binding regulations on private financing for coal.  

The data on private finance for coal is attributable to Urgewald and can be accessed at www.stillbankingoncoal.org.  

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An update to the organisation’s ‘green equity approach’ policy, which is aimed at intermediary clients such as commercial banks, explicitly states that IFC investment will no longer support new coal.

The policy previously only required financial clients to reduce their exposure by half by 2025, and to zero by 2030.

Financial intermediaries represent more than half of IFC’s investments and have received almost $40 billion of IFC support since May 2019.

The loophole had allowed the IFC’s financial clients to support a number of substantial new coal projects over the past five years.

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Hana Bank in Indonesia, for example, financed a 2 GW coal power plant in Indonesia in 2019. The plant is predicted to release 10 million tonnes of carbon dioxide a year, a similar amount to the the whole of Jamaica, for 25 years.

PVI Holdings, another IFC client, provided insurance to the Vung Ang II coal power plant in Vietnam in 2021.

Kate Geary, co-director of sustainable finance watchdog Recourse, said the change in policy sent a signal to the wider investment community that “the era of coal is over” and called on the IFC to extend the exclusion to oil and gas investments too. “This is a welcome step but a long time coming.”

David Pred, executive director of NGO Inclusive Development International, said it needed to enforce the new policy with its existing financial intermediary clients like Postal Savings Bank of China, which is among the leading financiers of coal in Asia.

Private backers

A growing number of financial institutions around the world have committed to ending support for coal.

But a report published today by Global Energy Monitor found that, while international public coal financing has all but dried up, new and expanded projects are still being backed by private money.

Of 99 private financial institutions that adopted new or updated coal policies in 2022, the report found most were “insufficient to align banks, insurers, and investors with climate science”. Only 12 of these policies were considered strong enough to halt support for the developers of new coal mines and power plants or set deadlines to end all coal power-related finance in the timeframe required.

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The IFC is expected to publish a plan to align its portfolio with the Paris Agreement during next week’s World Bank meetings.

The Compliance Advisor Ombudsman has received several complaints about the environmental and social impacts of the IFC’s support for coal. The Centre for Financial Accountability filed the first such complaint in 2011 over the backing of a coal project in India’s Odisha state, which the ombudsman is still monitoring.

Joe Athialy, the centre’s executive director, noted that it had taken over a decade for the IFC to finally end its support for new coal. “In the meanwhile, communities got scattered, their livelihood stolen and the climate crisis made more severe, with nobody held accountable for all these, and more. We can only hope it moves faster to stop funding oil and gas.”

As well as fossil fuels, the IFC has been involved in other controversial projects such as a hydropower project that threatens to displace thousands of people in Mozambique.

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The Climate Investment Funds (CIFs) secured up to $2billion this year from G7 countries to help wean the world off coal as part of efforts to limit global heating to 1.5C – the tougher goal of the Paris Agreement. 

“It is not enough to focus on clean energy investment,” Mafalda Duarte, CEO of the Climate Investment Funds, told Climate Home News in an interview. “Unless we focus on accelerating the pace at which we move away from coal, we are not going to meet the Paris Agreement goals.”

Earlier this year, Cop26 president designate Alok Sharma said the UK wanted to make the November Glasgow summit “the Cop that consigns coal to history”.

Duarte said the G7’s funding pledge was “a powerful signal” to developing nations that rich countries support their energy transition.

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The CIFs is in the process of identifying two or three developing countries to pilot the programme and benefit from the first tranche of investment.

South Africa, India and Indonesia are potential candidates, where coal mining is a significant but precarious source of employment.

Earlier this week, Coal India, one of the world’s largest mining companies, responsible for around 80% of India’s coal output, announced it will cut its workforce by 5% every year for the next 5-10 years to reduce costs as it plans to close unviable mines. There was no mention of a plan to reskill workers.

Duarte urged all coal-dependent nations to get in touch. If successful, subject to support from donor countries, the programme could be extended.

The aim, Duarte said, is to “accelerate the tipping point at which it’s cheaper to build a new renewable energy power plant than maintain an existing fossil fuel plant” – something that still isn’t the case in many developing countries.

According to analysis by the Rocky Mountain Institute, in 2020 the net cost of completing the global coal-to-clean transition would have been $128 billion, dropping to near zero by 2022 before generating net savings of more than $107bn by 2025.

But, while in the US and Europe completing a coal phase out in 2020 already offered estimated annual net savings of around $9bn each, in China and India it would have resulted in annual net costs of $41bn and $21bn respectively, according to the study.

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Duarte told Climate Home that, although an estimated 42% of global coal capacity is already operating at loss, “pure economics are not going to play in favour of divesting from [relatively new] coal assets in time for meeting the Paris goals”.

Divesting from existing infrastructure is a lot more complex than investing in renewable energy, she added.

To address this, CIFs will use the G7’s $2bn to de-risk private sector capital and lower investment costs to repurpose coal assets, strengthen countries’ institutional capacity to manage the transition and create alternative job opportunities and social protection schemes for communities dependent on coal for their livelihoods.

Duarte said the CIFs would use the funding to demonstrate what sort of investments have the most impact when delivered at scale to accelerate a country’s coal exit.

“And then the market picks up and private capital can scale it to the point where you are moving in the direction of solving the problem. That is the point of acceleration,” she said.

In its statement, the G7 said the $2bn in funding was expected to mobilise $10bn in co-financing from the private sector.

The CIFs mobilises $9.5 for every $1 of concessional funding it spends in middle-income countries, Duarte told Climate Home. Others say it’s not as much. Analysis by Joe Thwaites, of the World Resources Institute, finds the CIFs has so far delivered $4.7 for every $1 spent.

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Perhaps most importantly, the fund will aim to showcase investments and social protection measures to support communities move away from fossil-fuel jobs.

Duarte told Climate Home there was very little research and evidence on what the transition of fossil fuel-dependent communities looks like in developing countries.

“I would say we desperately need to do work in this area and figure out how to do this. Otherwise, I don’t think we’re going to succeed,” she said.

The story was updated on 01/07/21 to add analysis on the amount of co-financing the CIFs mobilises. 

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According to researchers from Market Forces, CIMB invested $2.6bn in coal in the past decade, mainly through bond arrangement. In July 2020, it signed a loan agreement for the controversial Jawa 9 and 10 coal power complex in Indonesia.

“The advancement of sustainability principles is complex and must be seen as a journey, one that CIMB started only two years ago,” said CIMB group chairman Datuk Mohd Nasir Ahmad in a statement.

The change in direction marks a victory for environmental campaigners in Indonesia and Malaysia, who took out newspaper adverts in October calling for CIMB, RHB and Maybank to stop funding new coal.

Great news from Malaysia, as @CIMBMalaysia commits to a significant and strong policy to exit from #coal

This makes CIMB the first emerging markets bank to make such a commitment! Which other banks will follow with stronger coal policies?@COP26 @PastCoal @BeyondCoal @topnigel https://t.co/IePdjIZBjF

— Dr Helena Wright (@_HWright) December 8, 2020

Tim Buckley from the Institute for Energy Economics and Financial Analysis (IEEFA) said CIMB was the first “globally significant financial institution in the developing world to commit to a coal exit strategy as a core part of the wider effort to align with its sustainable profit objectives”.

He added: “This admirable move is expected to be the catalyst for a range of CIMB peers across [South-East Asia] to better align their lending practices with the technology driven energy system disruption that is accelerating as 2020 unfolds.”

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CIMB has been working on an update to its coal sector policy since November 2019. It will be put into practice in phases in 2021, banning asset-level or general corporate financing of new thermal coal mines or coal-fired power plants. Thermal coal is coal which is burned to create energy rather than used to make steel.

The policy prohibits the financing of mine expansions, unless the bank has already committed to them, and it sets out the expectation that electricity utilities which rely on coal should provide a diversification strategy.

Sophia Lim, CEO of World Wildlife Fund Malaysia, said the news was “encouraging”. She added: “Banks are progressively increasing their commitments to global standards and initiatives such as the UN Principles for Responsible Banking and this is definitely a good sign for sustainability. It is also reassuring to know that science-based civil societies are playing instrumental roles in advocating for best practices in sustainable finance.”

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The Kuala Lumpur-based bank is the fourth biggest company in Malaysia and has assets of over $140bn. According to Global Energy Monitor data, it has financed at least five coal-fired power projects in Indonesia and Malaysia, including the controversial Jawa 9 & 10 complex.

After China, Indonesia has the most coal-fired power plants in planning (52) and the nation is also a major producer of coal. New plants have proved controversial with locals complaining that their livelihoods, like fishing and farming, will be destroyed.

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Around the world, millions became unemployed practically overnight and millions lost a huge portion of their savings.

These events will have catastrophic consequences for people’s well-being and will shape economic and political trends for years, if not decades. This doesn’t even account for the impacts of the Covid-19 pandemic on human health and the tragic situation unfolding in hospitals around the world.

Much will be written about this historical event as society takes stock of what just occurred, but one thing is clear: resilience must be a driving force in the policy response.

As investors of last resort, governments have the key role to play. The central bank playbook in 2008 and 2020 is similar, as liquidity evaporated and financial contagion spread, central banks had to step in as buyers of last resort with increasingly larger rescue packages.

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At the same time, governments are working desperately on the fiscal front to provide economic stimulus to the real economy and prevent an economic depression. Estimates of bailout packages are in the order of $10 trillion globally and growing.

 So where does this leave us?

Governments and taxpayers bear the ultimate risk and thus have the mandate and responsibility to reduce these risks.

There will be a cost but as we clearly see with the Covid-19 pandemic, the cost of prevention pales in comparison. The same could be said about climate change. 

A working paper from the US National Bureau of Economic Research found that by 2100, the costs of climate change would reduce global GDP by 7.22% while the costs of prevention – by meeting the goals of the Paris Agreement – are substantially less, around 1.07% of global GDP.

For the US, the cost of inaction is even higher at 10.5% of GDP. To put things into perspective, this is roughly in line with the costs of a Covid-19 pandemic every year.

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As we move forward past this crisis, policymakers should have resilience in the front of their minds. Below are some practical steps that can be taken in our policy response not only to enable us to boost green growth and reduce greenhouse gas emissions but also to create a more resilient financial system.

Rebalance incentives for publicly traded companies to reward long-term sustainability over short-term profits

Companies are too focused on the next quarter at the expense of their long-term financial viability. Fiscal and monetary policies need to reward long-term investment and risk reduction. Executives should not be compensated based on stock performance but broader metrics.

Company boards should emphasise long-term stability and survivability. Inherent in this is the need to address climate risk. Stock buybacks financed with debt should be forbidden.

Better safety nets

Our world is moving towards greater disruptions from climate change, but also other types of crises driven by greater interconnectedness, which generates systemic risk. As we see with Covid-19, a crisis in one place can quickly spread to the rest of the world and this is not limited to communicable diseases.

Financial crises in one corner of the globe can impact our supply chains, and our financial markets as trading in various financial products is linked in incredibly complex arrangements, again, generating systemic risk. A world with more risks needs better safety nets and more resilient systems. There is a need to improve safety nets for all citizens whether these are economic, health and climate-related shocks.

Eliminate fossil fuel subsidies

An estimated $5.2 trillion is spent annually on fossil fuel subsidies. This is wasteful and damaging to the environment. It leads to inefficient use and unnecessary greenhouse gas emissions, creates rent-seeking in the economy and presents a huge opportunity cost for taxpayers.

Trillions should, instead, be invested in industries of the future which have the potential to provide for our energy needs while eliminating the risk of climate change. With oil at around $25 per barrel, consumer subsidies could be eliminated now with very little consequences.

Embrace telework trends 

As companies and consumers race to adapt to the massive disruptions from Covid-induced shutdowns, we have seen how millions of workers have adapted to working from home and used new technologies to collaborate in ways that were unimaginable a decade ago.

A distributed workforce can increase the resilience of business operations, can massively reduce transport-related emissions from commuting and work-related travel and can even increase the affordability of cities and generate distributional effects as there is less need to concentrate workers in one place.

Embrace the public sector 

View the public sector not as an investor of last resort but as a leader, shaping future investment trends in a way that is aligned with societal goals. Public investment shapes markets and creates benefits to society that the private sector cannot provide.

Through publicly-funded research and development programmes, scientists have developed the core technologies behind the internet and modern medicine. Similarly, the revolutions taking place in renewable energy production, electric storage and electrified transportation would not have been possible without early-stage investments made by the public sector.

Investments for public benefit in areas like new energy technologies, public health and urban infrastructure are critical to reducing long-term risks and can ultimately lower public outlays when disasters strike.

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While there is still hope for this public health threat to be minimised and, hopefully, eventually eliminated, our economic response will have repercussions for decades.

It’s the right time to focus on a vision for a resilient, inclusive, and sustainable economy.

Donovan Escalante is a manager at Climate Policy Initiative, an analysis and advisory organisation that works with governments and investors to drive economic growth while addressing climate change. 

The post Coronavirus: investors and policymakers must shift to increase resilience appeared first on Climate Home News.

Climate Analytics, a non-profit science and policy research institute based in Germany, said South Korea now has 60 coal fired plant units, accounting for a third of the nation’s greenhouse gas emissions, and another seven units under construction.

With expected lifetimes of 30 years, the new plants could be in operation into the 2050s.

“Korea must phase out coal power by 2029 in order to do its part to limit climate change under the Paris Agreement,” Climate Analytics said in a study, urging a far more rapid shift to renewable energies such as solar and wind power.

With only the existing plants, the country will overshoot its fair budget for greenhouse gas emissions by 2.5 times, it estimated.

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The 2015 Paris Agreement seeks to limit the rise in average global temperatures to well below 2 degrees Celsius above pre-industrial times, while aiming for a tougher limit of 1.5C. Worldwide, the UN´s Intergovernmental Panel on Climate Change says the 1.5C goal would mean cutting coal use  “close to 0%” of power generation by 2050.

Paola Yanguas Parra, an author of the report at Climate Analytics, told Climate Home News that South Korea should also halt its international role in backing coal in Asian nations including Vietnam and Indonesia.

“This is having a huge carbon footprint in other countries,” she said, citing estimates that Seoul had invested $5.7 billion in 22 foreign coal projects from 2013-19.

A 2019 report by the European Commission showed that South Korea’s greenhouse gas emissions were 13.9 tonnes per capita in 2015, the latest year for which data is available, more than double the world average of 6.7.

South Korea’s existing climate plan submitted as part of the Paris Agreement aims to cut emissions by 37% below projected rates of growth with no climate policies.

“Korea … is increasing the production of renewable energy in order to reduce greenhouse gas emissions from fossil fuel,” the plan says. The South Korean Environment Ministry did not immediately reply to a request for comment on Thursday’s study.

Sejong Youn, director at South Korea-based climate policy group Solutions for Our Climate (SFOC), said “2029 is an ambitious goal (for exiting coal) but I think it’s necessary to meet the Paris Agreement goals”.

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He told CHN it was unclear if Seoul would scale up the ambition of its climate targets this year, the five-year milestone of the 2015 Paris Agreement when countries are meant to upgrade or reaffirm their plans.

Worldwide, coal accounts for almost 40% of electricity generation and more than 40% of energy-related carbon dioxide emissions, the International Energy Agency says.

Some nations are setting dates for phasing out coal.

The Powering Past Coal Alliance, for instance, says it counts 33 governments among its members including G7 members Germany, France, Britain, Italy and Canada as well as other nations ranging from Ethiopia to the Marshall Islands.

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That was UK Prime Minister Boris Johnson’s message to African heads of state gathered in London this week to talk investments.

As the UK prepares to pull out of the EU, it has turned some of its attention to the African continent, where it intends to compete for business.

Johnson promised the UK would end all direct support for coal mining and coal-fired power plants overseas. Instead, he pledged to help African countries “extract and use oil and gas in the cleanest, greenest way possible” while “turbocharging our support for solar, wind and hydro”.

In the last few years, the UK had largely stopped financing coal mines and coal-fired power plants abroad but continues to spend billions in supporting oil and gas projects. About £2bn worth of oil and gas deals in Africa were announced shortly after the summit.

Environmentalists blasted hypocrisy, warning the announcement was “a drop in the ocean” compared with ongoing support for foreign oil and gas projects.

Carbon sinks

In other UK news, a fifth of the country’s agricultural land needs to be released for climate mitigation if it is to achieve carbon neutrality by 2050, government advisers have said.

That means planting trees, restoring peatlands and soils and growing bioenergy crops with carbon capture and storage. Consumption of carbon-intensive food such as beef, lamb and diary also needs to be reduced by a fifth and so does food waste.

The report comes as the UK’s first climate citizen assembly is due to meet this weekend to thrash out solutions to achieve the net zero emissions goal by 2050.

Ireland and France have also used citizens assembly to inspire climate policies and Spain could soon follow suit.

‘Prophets of doom’

Climate change was the hot topic in Davos. Greta Thunberg reminded the world’s rich and powerful of the science, warning the 1.5C goal risked slipping out of reach as the world rapidly consumes its remaining carbon budget to limit warming below the Paris deal temperature target.

“We don’t need to lower emissions, our emissions have to stop,” she said.

Donald Trump lamented missing Thunberg’s speech. There was no eye roll this time but the US president hit back at climate activists, denouncing them as “prophets of doom” as he boasted about the economy. Expect more of this in the run-up to November’s presidential election.

Gullies

In Nigeria, where climate change is causing more intense downpours, land is opening up under people’s feet, swallowing homes, farms, businesses and roads.

The erosion crisis is exacerbated by more frequent landslides and has been estimated to cost up to $100 million every year. Up to 90% of agricultural yield have been lost as a result in some areas.

Linus Unah reports from Nigeria.

Icy ruling  

Norwegian plans to drill for more oil and gas in the Arctic do not violate people’s rights for a healthy environment.

The ruling by the Oslo Court of Appeals endorsed a previous court decision vindicating the government’s handing out of oil exploration licences in the Arctic. However, the court acknowledged that emissions from burning Norwegian fossil fuels abroad should be included in assessing environmental damage.

Greenpeace, which brought the lawsuit, said it would take the case to the Supreme Court.

Quick hits

• Erosion crisis swallows homes and livelihoods in Nigeria
• UK to stop funding coal abroad but will help Africa with oil, gas
• Thunberg says only ‘eight years left’ to avert 1.5°C warming
• Trump criticises ‘prophets of doom’ in Davos and touts fossil fuels
• UK must cut land use emissions by two thirds to meet 2050 goal, advisers warn
• Oslo court backs Arctic oil exploration in defeat for environmentalists

And in climate conversations

• 2020 may be ‘last opportunity’ to limit warming to 1.5°C

The post ‘Trundling over to Africa’ – Climate Weekly appeared first on Climate Home News.

His speech was a stark contrast to calls in Davos by Swedish teenage climate activist Greta Thunberg for drastic action by world leaders to shift to cleaner energies to avert a worsening climate crisis of more heatwaves, droughts and floods.

At a session titled “averting a climate apocalypse” by the Davos organisers, Thunberg, 17, said people were rightly outraged at Trump for withdrawing the US from the 2015 Paris climate agreement and faulted other world leaders for failing to cut greenhouse gas emissions.

Meanwhile, Trump told the world´s political and business elite: “This is a time for optimism.”

“The US is in the midst of an economic boom the likes of which the world has never seen before,” he said.

He urged other nations to follow the US lead in promoting deregulation of energy to ensure cheaper gasoline and electricity that he said saved American families on average $2,500 a year. He added that, by contrast, European consumers suffered “crippling” energy costs.

“To embrace the possibilities of tomorrow we must reject the perennial prophets of doom and their predictions of the apocalypse,” Trump said.

Trump said that modern “alarmists” were heirs of those who wrongly predicted an over-population crisis in the 1960s, mass starvation in the 1970s and that oil would run out in the 1990s.

Thunberg says only ‘eight years left’ to avert 1.5°C warming

Trump, who did not mention the words “climate change” or “global warming” in his speech, is the only world leader pulling his nation out of the 2015 Paris Agreement, which seeks to limit global warming by cutting greenhouse gas emissions.

Extreme weather, climate action failure, natural disasters, biodiversity loss and human-made environmental disasters top most likely long-terms risks to the global economy in 2020, according to the survey for the World Economic Forum among business leaders, investors and policy-makers.

Last year was the second warmest on record and average global temperatures are about 1.1°C above pre-industrial times, according to the UN.

Thunberg called for immediate action.

“The fact that the USA is leaving the Paris accord seems to outrage and worry everyone and it should. But the fact that we are all about to fail the commitments you signed up for in the Paris Agreement doesn’t seem to bother the people in power even the least,” she said.

Thunberg warned business and political leaders the tougher 1.5C goal of the Paris Agreement risked slipping out of reach with the world rapidly consuming the remaining carbon budget identified by the Intergovernmental Panel on Climate Change (IPCC) to remain within the 1.5C temperature goal by the end of the century.

She warned the world had only eight years left to limit warming to 1.5C at the current rate of greenhouse emissions.

“Let’s be clear,” she said, “we don’t need a low-carbon economy, we don’t need to lower emissions, our emissions have to stop if we are to have a chance to stay below the 1.5C target.” “Any plan or policy of yours that doesn’t include radical emissions cuts at the source starting today is completely inefficient” to meet the Paris goals, she added.

Trump said his policies to promote energy – including “clean coal, next generation nuclear power and gas hydrate technologies” – meant the US “no longer needs to import energy from hostile nations” and that US exports could also help its allies ensure energy security.

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On the environment, Trump said US air and water were cleaner than at any time on record. He also said that the US would join a one trillion tree planting project being launched at Davos.

Trump, visiting Switzerland on the day his impeachment trial begins in earnest in the US Senate, said that Americans were thriving with low unemployment, high growth and investment.

Before the start of the Davos meeting, Thunberg and a number of young climate activists called on banks, investors, companies, institutions and governments to immediately halt all investments in fossil fuels exploration and extraction, end all fossil fuel subsidies and completely divest from fossil fuels.

“So either you do this or you’re going to have to explain to your children why you are giving up on the 1.5C goal – giving up without even trying,” she said. “People will not give up. You are the ones who are giving up.”

The post Trump criticises ‘prophets of doom’ in Davos and touts fossil fuels appeared first on Climate Home News.

One of the most important is that for the first time in the United Nations space you can say the f-words in polite company. We’re of course talking about “fossil fuels.”

The 2015 Paris Climate Agreement ran 16 pages, but didn’t mention the words “fossil fuels” “coal,” “oil,” or “gas” once. That’s a striking omission considering the central role that fossil fuels play in contributing to the climate crisis. Nearly two-thirds of the greenhouse gas emissions contributing to global warming come from the production and burning of coal, oil and gas.

The UN climate talks can tackle fossil fuels head-on: here’s how

The problem is only getting worse: according to research released earlier this month, emissions from fossil fuels just hit an all-time high, increasing 4% since countries signed onto Paris. It’s as if Alcoholics Anonymous just called itself Anonymous, and no one ever mentioned whiskey, beer or wine.

It’s no secret how “fossil fuels” became dirty words at the climate talks. Since the “conference of the parties” began 25 years ago, fossil fuel industry lobbyists have had unfettered access to the process. Unlike the World Health Organization, which bans tobacco lobbyists from taking part in negotiations about tobacco cessation efforts, the UN Framework Convention on Climate Change (UNFCCC) has no protections against industry corruption.

At Cop25 in Madrid, big oil companies like Shell and industry front groups like the Canadian Association for Petroleum Producers, were busy pitching various carbon trading schemes and geoengineering technology designed to allow them to continue to produce fossil fuels, the one thing we need to stop if we’re going to truly address the climate emergency. If you want to blame someone for the failure of Cop25, pointing a finger at the fossil fuel industry and the countries that do their bidding would be a good place to start.

Irreconcilable rift cripples UN climate talks as majority stand against polluters

That’s why it’s so important that for the first time in this process we can talk about phasing out fossil fuel production without getting (too many) dirty looks. The change in norms is first and foremost thanks to the tireless advocacy of activists on the frontlines of this crisis, especially indigenous communities who have led the fight against fossil fuel expansion. Their insistence that we must “keep it in the ground,” is finally penetrating the political process. When the UN secretary general opened Cop25 he said, “we simply have to stop digging and drilling,” something that would have gotten him thrown out of the building just a few years ago.

Also shining a spotlight on the f-words are a series of important new reports that were released at the talks in Madrid. According to the Production Gap Report by the UN Environment Programme and leading research institutions, governments are planning to produce 120% more fossil fuels by 2030 than would be consistent with limiting warming to 1.5C.

Cop25: What was achieved and where to next?

That conclusion was backed up by the Oil, Gas, and Climate Report, also released at Cop25, that showed how oil companies are planning to invest $1.4 trillion in new oil and gas extraction projects between 2020 to 2024. 85% of the expanded production is slated to come from the US and Canada. This would lock in 148 gigatonnes of cumulative carbon dioxide emissions, equivalent to building over 1,200 new coal-fired power plants. The numbers are so shocking that they’re impossible to avoid.

Now that we’ve admitted we have a problem with fossil fuels, we need to move on to the next step and start limiting their production.

There’s precedent for the UN to apply this sort of “supply side” approach. The Montreal Protocol successfully protected the ozone layer by phasing out the production and consumption of “ozone depleting substances”, such as chlorofluorocarbons.

The climate talks should take a similar approach by phasing out production of  “climate destroying substances” – namely, fossil fuels. Part of that plan must ensure that there is a just transition away from fossil fuel energy for workers, communities, and developing countries. It’s not poorer countries or working people that caused this crisis, it’s the oil industry CEOs who knowingly spread misinformation and delayed progress: they’re the ones who need to pay.

The good news is that some countries, regions, businesses, and investors are beginning to take action. New Zealand, France, Costa Rica, Belize and Denmark have all taken steps to stop the future extraction of oil and gas, although there are significant loopholes that need to be addressed.

In November, California, the third largest oil producing state in the US, blocked new fracking pending further scientific review. Leading Democratic candidates for president have also put forward plans to ban fracking and stop coal, oil and gas production on public lands.

On December 9, the $24 billion Norwegian insurance giant Storebrand divested from fossil fuels, joining more than 1,000 institutions worth over $17 trillion who have made some form of fossil fuel divestment commitment. Last week, the Swiss parliament announced it would be looking at divesting the $800 billion Swiss National Bank.

How Cop25 turned its back on climate action

Now that the f-words are being said, there’s no more space for countries like the US and Canada (or companies like ExxonMobil and Shell) to wave about climate solutions with one hand while expanding fossil fuels with the other. As we move forward in addressing the climate emergency, stopping new fossil fuel projects, like the Teck Mine in the Canadian tar sands or drilling in the Permian Basin, will take centre stage for the growing climate justice movement.

As Greta Thunberg has said: “our house is on fire”. At this year’s UN climate talks, it was finally clear we have to stop adding fuel to the flames.

Catherine Abreu is the executive director of Climate Action Network Canada, Jamie Henn is co-Founder and strategic communications director of 350.org.

The post Finally saying the F-words at UN climate talks  appeared first on Climate Home News.

Lagarde, a veteran French conservative politician and former head of the International Monetary Fund (IMF), is seeking approval from the EU parliament to head the ECB – the most powerful economic institution in Europe.

Answering questions from members of the EU parliament’s economic and monetary affairs committee, Lagarde suggested the bank should “move towards more green products” and pledged to “continue to look at that and how the ECB can be an actor in this”.

While the amount of carbon assets in the ECB’s portfolio “can’t change overnight”, Lagarde said a “move to a gradual transition to eliminate this type of assets” was “something that needs to be done”.

Natural disaster spike to drive 2020 insurance rate rise

Cautious not to make “premature commitments”, Lagarde told MEPs that the ECB could not exclusively invest its €2.6 trillion portfolio in green bonds “because there is not enough of a market”. However, she added that if the ECB “signals that it will be increasing and will be intensively looking at [green bond investments] then it’s also something for the market to register”.

In written answers to MEPs’ questions last month, Lagarde said that discussions on how central banks and banking supervisors “can contribute to mitigating climate change is at an early stage but should be seen as a priority”.

Lagarde faces a confirmation vote in parliament next month. Addressing MEPs, she reaffirmed that “climate change and environmental risks are mission-critical” to the ECB and should be “at the core” of any institution’s mission.

As head of the IMF, Lagarde campaigned for greater disclosure of the risk climate change poses to the financial system. Under her leadership, the fund was also highly critical of fossil fuel subsidies.

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ECB investment decisions are governed by the long-standing principle of market-neutrality, which proscribes the bank from preferring one sector over another. The former French finance minister suggested a classification system currently being developed by the EU parliament to define what constitutes a green asset, would need to be “superimposed” with market-neutrality.

For Stanislas Jourdan, head of Positive Money Europe, a campaign group that has called for the ECB to do more to promote green finance, market-neutrality is “inconsistent with the ECB’s strategy to shift market participants’ behaviour on sustainability”. He believed moving beyond the market-neutrality approach was “the cornerstone” for greening the bank’s investments.

“It was positively surprising that she would be ready to move on this,” he said. “I think she completely confirmed that she is ready to make headway in the right direction.”

Pierre Monnin, a fellow at the Council on Economic Policy specialising in the environmental and social effects of monetary policy, told Climate Home News Lagarde’s answers to climate questions were “definitely more progressive than the responses that [outgoing ECB president Mario] Draghi use to give on the same issues”.

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Monnin welcomed Lagarde’s indications that she is ready to consider options to decarbonise the ECB’s portfolio. “This could already have an impact on financial markets,” he said.

The private sector is shifting away from products with high climate risks, with investors concerned that the transition of the global economy towards greener markets could leave assets stranded or reduced in value.

A report published on Wednesday by S&P Global Ratings showed the responsible loans market grew dramatically over the last year, jumping from $32 billion in 2018 to a value of $111.5bn as of July 2019.

Lagarde’s comments come after campaigners published a blueprint for a Green New Deal for Europe this week, recommending that the union finance its green transition through bonds issued by the European Investment Bank and by mobilising public banks to issue green bonds.

European Commission president-elect Ursula von der Leyen, who is due to take office on 1 November, previously pledged to develop a “green deal” for Europe in her first 100 days in office. Although details of her proposal remain unclear, Lagarde welcomed the move.

The post European Central Bank should ‘gradually eliminate’ carbon assets: Lagarde appeared first on Climate Home News.

European Investment Bank (EIB) revealed the strategic shift in a draft on energy lending policy on Friday.

If adopted by EU finance ministers on 10 September, the policy will pull the plug on finance for infrastructure dedicated to coal, oil and gas by the end of 2020. Instead, it will pivot to clean energy projects.

“This is the result of several months of work and it’s also a reflection of the views we have heard from hundreds of stakeholders across Europe as to what the priorities of the European Bank should be when it comes to supporting energy in the future,” said vice president Andrew McDowell in a video statement.

“The main proposals are clear: we want to increase our support for the energy transition in Europe, the decarbonization of the European economy. We want to support more energy efficiency and energy savings projects, we want to help further decarbonize energy supply, through more support for renewable energy. We want to support energy innovation, new technologies that will be necessary in the future to meet ambitious climate and energy commitments. And we need to support more the energy infrastructures of the future, particularly the electrification of the European economy.”

The draft proposes some exemptions including production of biofuels and high-efficiency gas-fired combined heat and power plants.

Comment: A weak carbon price is worse than no carbon price

Environmental organisations, which have been calling for such a shift for years, erupted over the news.

“This is a crack of light in the darkness,”  Colin Roche, fossil free campaigner at Friends of the Earth Europe said. “While the EU and national governments are floundering as the planet burns, the EU’s public bank has made the brave, correct and just proposal to stop funding fossil fuel projects. We are now urging the European Investment Bank’s board to endorse this step forward, and ensure there are no loopholes for fossil fuel funding.”

The policy is something the EU could present at the climate action summit convened by UN chief Antonio Guterres in New York on 23 September.

“Saying that their bank is aligning its energy lending with Paris [Agreement] by ruling out fossil-fuel funding, is pretty significant,” Lisa Fischer, a policy advisor at think-tank E3G, told Climate Home News. “It will set the standard for others to follow.”

The initiative would also “put a lot of pressure on the European Union to align its infrastructure priorities,” Fischer said.

Guterres asks all countries to plan for carbon neutrality by 2050

The proposed ban on funding natural gas may meet resistance, Fischer said. Having committed to end coal power by 2038, Germany is eyeing gas as a bridge fuel.

“We know that there’s a disagreement between ministries in Germany, so that the environment ministry [wants] to exclude fossil fuels, but they’re not actually holding the pen,” Fischer said. “It’s the economy ministry that is writing the position and sending the finance ministry that will relay it.”

Meanwhile, Romania has not given up on the dream of extracting gas in the Black Sea, despite a spate of recent regulation making that task harder. Another country rich in gas, Bulgaria, could also lobby against the proposal.

Championed by French economist Pierre Larrouturou and top climate scientist Jean Jouzel, the idea of an EU bank for climate investments has piled pressure on the EU’s lending arm in the past months. More than 600 political figures backed the initiative, with French president Emmanuel Macron,  Spanish president Pedro Sanchez and the pope ranking among its most influential supporters.

“It’s put a lot of tension on the EIB that wasn’t there beforehand,” Fischer said. “The EIB came out saying: ‘Hang on, we’re the climate bank!’ I think that set the standard and then it was about translating what that means.”

Last year €16.2 billion euros, or 30% of the EIB’s lending, went towards climate action.

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The post European Investment Bank moots fossil fuel lending ban appeared first on Climate Home News.

For the first time in the history of the European elections, the climate crisis was a decisive issue for many voters because us young people helped make this a big ticket issue – even though we were unable to actually vote.

Politicians, at both national and European level are failing to take the transformative action the climate breakdown calls for. We demand politicians make limiting global temperature rise to the critical 1.5C threshold a top priority.

Today, there is a more powerful mandate for climate action in Europe than we ever had before, but we are not prepared to sit back and leave our future in the hands of politicians. We are the first generation to really be hit by the impacts of climate change and we are the last generation who can prevent an irreversible collapse of our climate. The science is clear: limiting global heating to 1.5C or below is achievable, it is a matter of justice, a matter of political will and crucially a matter of people power. We are taking action now and in the coming months because we are not willing to take our chances with politicians.

EU commission urged bank to support Azerbaijan gas pipeline

That is why last Friday, well over a million youths around the world took to the streets again with over 1800 climate strikes in more than 130 countries, and why we took our protest to the EU banks that are fuelling the climate crisis. In Europe, we demand that our public banks stop fossil fuel funding and instead invest in the transformation of our economy we urgently need. These banks control the money and have the power to effect real change. The action we need requires systemic change and that demands that we shift the flows of capital. The banks control the money, so they have the power to effect real change.

Currently, both the European Central Bank and the European Investment Bank provide easy finance, worth billions of euros, to the fossil fuel industry. In addition to providing loans that enable fossil fuel projects in the first place, these public banks also provide a ‘rubber stamp of approval’ by taking on the bulk of any financial risk, which guide the private banks before getting involved.

This article is part of a collaboration between Climate Home News and the global student climate strike movement. Read why we are offering a platform to young people here.

Further still, public institutions like the European Investment Bank continue to provide direct technical and legal support for new fossil fuel projects to directly help them get realised. In many respects these banks are often more than just passive lenders to projects. They facilitate projects going ahead from conception to completion and offer up public money to take on the financial risks of these projects.

Coal, oil and gas companies are the main driver of greenhouse gas emissions. Their destructive business plan to keep developing more and more fossil fuels is incompatible with a liveable planet and the Paris Agreement. The destruction of our climate should not be enabled with our public money. The European Investment Bank is currently reviewing its energy lending policy. We demand that the group of finance ministers that comprise the EIB’s Board of Governors seize this moment to cut funding for massive new fossil gas projects and treat the climate crisis with the gravity it requires.

Until Russia allows us to rise together, I will strike for the climate alone

Instead of lining the pockets of fossil fuel CEOs and their shareholders, European public money should be going towards the transition to a fossil free economy, which requires massive investments and is in all of our interest. The European Central Bank has been a key player in obstructing the transition to a low-carbon society. Its push for austerity measures forced many countries, especially across southern Europe, to make deep cuts in areas that are vital to address the climate crisis such as public transport and renewable energy.

Since 2008, central banks in Europe have created €2.4 trillion worth of ‘new money’ to bail out the very institutions that have caused the financial crisis. If we can print trillions to save the banks, we can mobilise the finance needed to build out the energy infrastructure and low-carbon society and avert climate breakdown.

We know that banning fossil fuel funding and investing in the new economy is only the start to a deeper transformation of our financial institutions and societies. EU banks are major players propping up the destructive status quo of financial markets striving for infinite growth, which has pumped gigantic amounts of money into fossil fuel extraction and has pushed us beyond what our planetary boundaries can sustain.

‘This is bigger’: Palestinian and Israeli teens strike together for the climate

We have shown that even if we are not able to cast our votes in elections that does not mean we are without power. School strikes around the world have been mobilising millions of people in communities across the world. We cannot and will not allow the blatant disregard for our futures to continue. We have shifted the debate in the lead-up to the European elections and influenced the outcomes. We need to build on this momentum and push for bold action on climate change, which also needs to provide an answer to the social and economic issues that have emboldened far-right parties.

This movement is only building in strength as we confront the institutions driving climate breakdown, we will leave politicians with no choice but to act. We will make sure that the climate emergency can no longer be ignored by the political and financial backers of the fossil fuel industry. This is not just our generation’s job. We are already planning for another massive global mobilisation. Starting with a global climate strike on 20th September, we will kick off a week of climate action and call on adults to take action alongside us.

Konstantin Nimmerfroh is from Fridays for Future Frankfurt and Erik Konijn is part of Youth For Climate Luxembourg.

The post Children made climate an election issue. Now we’ll target banks that fuel fossils appeared first on Climate Home News.

The proposal, which needs to pass parliament, is not quite as radical as it first appears. The sell list is limited to $7.5 billion worth of shares in 134 companies purely focused on exploration and production. Majors like Shell and Exxon Mobil, with more mixed business models, escape the ban – as does state oil company Equinor.

Still, it was welcomed by climate campaigners as a wake-up call to markets: fossil fuel ventures are an increasingly risky business.

Turkish coal stalling

Turkey’s massive wave of planned coal plants has long been viewed as one of the world’s great, undetonated carbon bombs. But those plans, so far, remain unrealised and face strong grassroots resistance. One group of locals won a big victory in the highest court recently, blocking Hema Elektrik’s 1,320 megawatt project, Megan Darby reports.

Weeds and dead fish

The largest lake in Africa is struggling against multiple human threats, including climate change. Our reporter Frederic Musisi Timberlake travelled to Lake Victoria’s deadest corner to find those living there struggling to make ends meet.

Santiago, 2-13 December

That’s the place and newly-released date of the UN’s next climate conference.

Climate bank for Europe?

Emmanuel Macron has jumped aboard a proposal to create a body to spread climate-focused investment throughout the EU. Convinced by his environment minister that the idea is a good one, Macron – himself a former banker – has leapt on the idea, which has already been backed by 600 political figures, Natalie Sauer reports.

Speaking after our story was published, Macron said: “We need to finance everything that is good for the climate far faster. This is why I support… the idea of having a climate bank. I think Europe needs it.”

Also in Europe, campaigners are are suing the EU over its support for wood-burning as renewable energy.

Brexit means…

It was always a key demand of the leave campaign that the UK would cease being a rule-taker after it leaves the EU. But on Wednesday, Brexiter and environment minister Michael Gove told MPs England’s new environment bill would be a simulacrum of current EU law and enforcement.

Also this week, Sara Stefanini reports that Northern Ireland has asked to be included in the English bill. That raises the question of what happens to Scotland and Wales, which will have no replacement for EU environment law if the UK crashes out in a few weeks time.

Climate conversations

Green New Deal contains a tension between climate and social goals – Matthew Paterson

Let’s talk about Icao’s social media

As the UN’s aviation body agreed behind closed doors on a small but important step forward to close the many carbon credit loopholes airlines may exploit, its social media account was on the warpath.

The International Civil Aviation Organization (Icao) responded to tweeters who raised fairly vanilla concerns over airline emissions by labelling them “#fakenews” and threatening to block them. Weird.

While we believe in using #socialmedia as a valuable tool for engagement, your characterization includes a variety of misleading and false statements. Our twitter feed is not a forum for #fakenews, and we will have to preclude you if it happens again.

— ICAO (@icao) March 5, 2019

Also reading:

• The Netherlands will close a coal plant four years early, to comply with the landmark Urgenda climate court ruling (Reuters)
• Buzzfeed’s extraordinary and troubling exposé of WWF’s links to paramilitary forces
• The Guardian’s look at coal giant Glencore’s secret climate disinformation campaign
• Vanity Fair’s dive into the murky world of South Africa’s Gupta brothers, who controlled both the coal sector, and government policy

The post Climate Weekly: Norway divests (a bit) appeared first on Climate Home News.

After a year of deliberations, the finance ministry announced its decision on Friday, citing oil price risk. Norges Bank, which manages the fund, had advocated diversifying, because public finances already depend heavily on domestic oil and gas production.

The proposal affects 70 billion Norwegian krone ($8bn) worth of shares in 134 companies purely focused on exploration and production, according to small print in a government white paper. Majors like Shell and Exxon Mobil, with more mixed business models, are exempt, as is state oil producer Equinor.

“The objective is to reduce the vulnerability of our common wealth to a permanent oil price decline,” said finance minister Siv Jensen. “Hence, it is more accurate to sell companies which explore and produce oil and gas, rather than selling a broadly diversified energy sector.”

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The proposal is expected to go to parliament for approval, where it is thought to have majority support.

Greenpeace campaigner Martin Norman said it was a “baby step in the right direction” and he hoped lawmakers would expand the proposal to cover bigger companies before approving it.

Yossi Cadan, senior divestment campaigner at activist network 350.org, said: “If it passes through parliament it will produce a shockwave in the market, dealing the largest blow to date to the illusion that the fossil fuel industry still has decades of business as usual ahead of it.

“The decision should sound like a red alert for private banks and investors whose oil and gas assets are becoming increasingly risky and morally untenable.”

Built on oil wealth, Norway’s fund has nonetheless made some of the biggest moves away from fossil fuels of any major investor. Parliament backed a plan to divest from coal in 2015.

Globally, more than two thirds of proven coal, oil and gas reserves are unburnable within the global warming limits set out in the Paris Agreement. That raises the stakes for fossil fuel ventures: either they will lose value as climate policies bite, or profit while the world burns.

The government’s decision highlights a tension between its investment strategy and energy policy, which the finance ministry said was unchanged. “The oil industry will be an important and major industry in Norway for many years to come,” said the statement.

Oil and gas majors are increasingly sensitive to investor pressure. Several have been forced by shareholder resolutions to disclose analysis of how their businesses measure up to climate goals. At last month’s International Petroleum Week in London, Saudi Aramco chief Amin Nasser shared his fears that key stakeholders saw the industry as having “little or no future”.

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Yet, on February 6, the European Investment Bank, the EU’s long-term lending institution, voted to provide a €1.5 billion loan to the controversial Trans Adriatic Pipeline (Tap).

The Tap is the Western part of a larger Southern Gas Corridor proposal that would ultimately connect a large gas field in the Caspian Sea to Italy, crossing through Azerbaijan, Turkey, Greece and Albania. And while gas might be cleaner than coal, it’s still a fossil fuel.

So how does the EU’s support for this major project fit in with its supposed goal of addressing climate change?

The proposed Trans Adriatic Pipeline will run nearly 900km from Greece to Italy (Pic: Genti77 / wiki, CC BY-SA)

A key problem is the message this sends to the private sector, where renewable energy is increasingly seen as a good investment. Technologies once perceived as too risky and too expensive are now delivering worthwhile returns thanks to reduced costs and breakthroughs in energy storage. The price of electricity generated by solar, wind or hydro is now comparable with the national grid.

Over the past decade, investor meetings have shifted from discussing whether the transition to a low carbon economy will start before 2050, to whether it will be completed in the same period.

#Pipeline parts being laid out end to end (stringing) – this is now complete for more than 633km of #TAP route. #engineering #energy #energysecurity pic.twitter.com/O6jpwVJ0K3

— TAP (@tap_pipeline) January 5, 2018

But there is still not enough money being spent on renewables. While clean energy investment in 2017 topped US$300 billion for the fourth year in a row, this is far short of what is needed to unlock the technology revolution necessary to tackle climate change. There is clearly a gap between what is required and what is being delivered.

The private sector will continue to invest significant capital into energy projects over the next few decades, so one issue facing policy makers is how to influence investors away from fossil fuels and towards renewable projects. To really scale up investment into renewable infrastructure, long-term and stable policy is required – which investors see as clearly lacking.

By funding the Trans Adriatic Pipeline, the EU’s investment bank is hardly signalling to the private sector that governments are committed to a green energy transition.

If Europe really was to follow through and successfully switch to green energy – and such a transition is partially underway – then the pipeline project may even represent a risk to public finances.

Studies on climate change point to the need for a greater sense of urgency and ambition and, to stay within its “carbon budget” under current agreed emissions targets, the EU needs to be fossil fuel free by 2030.

So any large oil and gas infrastructure projects with investment returns beyond 2030 are saddled with risk. In just a decade or two, super-cheap solar and wind power could mean that gas pipelines such as TAP would no longer make financial sense and would become worthless “stranded assets”. Yet TAP backers are touting economic benefits for countries such as Albania extending to 2068 – well beyond the date when Europe must entirely ditch fossil fuels.

The EU’s official stance is to hail natural gas as a cleaner “bridge fuel” between coal and renewables. But high leakage rates and the potent warming impact of methane (the primary constituent of natural gas) means that the Southern Gas Corridor’s climate footprint may be as large, or larger, than equivalent coal. Abundant natural gas is also highly likely to delay the deployment of renewable technologies.

We’re taking on Big Oil because it’s the right thing to do to protect the future of our city and our planet. pic.twitter.com/kezomaxKiL

— Bill de Blasio (@NYCMayor) January 13, 2018

For the first decade of this century Europe prided itself on leading the political debate on tackling climate change. Now, it appears to be losing its boldness. To drive through a new technology revolution, the public sector needs to lead from the front and take bold decisions about its energy strategy.

A gas pipeline is not a technology of the future. If California can release YouTube videos describing the importance of considering stranded assets during this energy transition, and New York City can announce plans to divest from fossil fuels, then maybe it is time for the EU to turn off the TAP.

Aled Jones is a professor and director of the Global Sustainability Institute at Anglia Ruskin University

This article was originally published on The Conversation. Read the original article.

The post EU subsidies to a massive gas pipeline clash with climate goals appeared first on Climate Home News.

Shareholders Guy and Kim Abrahams allege the Commonwealth Bank of Australia failed to disclose risks it faces that relate to climate change.

Represented by law firm Environmental Justice Australia, they will argue in the federal court that the bank’s 2016 directors’ report withheld material information. If successful, the claim would force the bank to provide more detailed climate risk analysis.

“We bought Commonwealth Bank shares more than 20 years ago as an investment in our children’s future,” said Guy Abrahams, art consultant and co-founder of non-profit Climarte, in a statement.

“We are deeply concerned about the serious risks that climate change poses to the environment and society. The bank should tell investors about the risks climate change will have on its business.”

His wife Kim, a medical practitioner, added: “The Commonwealth Bank is Australia’s biggest company and should be a leader in responding to climate change and accurately reporting the risks to shareholders.”

Guy and Kim Abrahams want Commonwealth Bank to take a lead on climate risk

Report: Trump lawyers try ‘extraordinary trick’ to quash youth climate case

The case reflects mounting concern about the potential impact on the financial sector of climate change and the transition to a clean economy.

In particular, disruptive clean technology and climate policies are turning once blue-chip energy investments into a risky bet. A significant portion of listed coal, oil and gas assets are to be rendered worthless by the international effort to hold global warming below 2C.

According to campaign group Market Forces, CommBank has loaned $6bn to fossil fuel projects since world leaders agreed the Paris climate pact in December 2015. The investments have a lifetime carbon footprint of 2.8bn tonnes of CO2, the most polluting portfolio of Australia’s “big four”.

In June, a heavyweight task force led by businessman and former New York mayor Michael Bloomberg issued detailed guidelines to corporations on measuring and reporting climate risk.

While voluntary, the guidelines have been widely endorsed by climate campaigners, financial regulators and business leaders.

Report: Exxon shareholders win ‘historic’ climate vote against board’s advice

Geoff Summerhayes of Australian Prudential Regulatory Authority has said “climate risks will become an important and explicit part of our thinking”.

This is not just an environmental concern for the future, he stressed: “Some climate risks are distinctly ‘financial’ in nature. Many of these risks are foreseeable, material and actionable now.”

Called to give evidence to a parliamentary committee in March, CommBank chief executive Ian Narev could not say whether its portfolio was aligned with the 2C limit.

In another public statement, the bank said it had not been approached to fund controversial coal mining ventures in Queensland’s Galilee Basin, but did not rule out involvement.

Environmental Justice Australia lawyer David Barnden said the case would set “an important precedent” for other companies on climate risk disclosure.

That could extend beyond Australia, added Daniel Wiseman, an Australian-qualified lawyer at London-based firm Client Earth. “Many other countries already have similar disclosure requirements to Australia.

“In the UK, the Bank of England and other financial regulators have now made clear that financial institutions like banks and insurers must consider climate risk.

“To limit exposure to this sort of litigation, business leaders need to get acquainted, and quickly, with their legal duties and with emerging industry standards.”

The post Australian bank sued over failure to disclose climate risks appeared first on Climate Home News.

The #UnfriendCoal campaign builds on the work of the divestment movement to make polluting fossil fuel ventures harder to finance.

It launched on Wednesday as French insurance major Axa announced it was ending insurance support to coal-intensive businesses. Companies getting more than half of their turnover from mining or burning coal are now eligible for Axa insurance cover only in “exceptional” circumstances.

That aligns its insurance business with its asset management arm, which is ditching €177 million ($192m) of coal holdings, in line with a 2015 pledge.

Explaining its policy, the company said most fossil fuel reserves needed to stay underground to meet the goals of the Paris climate deal. Some assets could be “stranded” as the low carbon shift kicks in.

Its statement added: “Coal is often a low-cost form of energy, and is widely available to a large proportion of the world’s population. However, coal is also the most carbon-intensive energy source. Axa, like many investors, believes coal both poses the biggest threat to the climate and its business is the most likely to be constrained.”

Weekly briefing: Sign up for your essential climate news update

A report by consultancy Profundo found that Europe’s 15 biggest insurance and reinsurance companies still have $130 billion invested in fossil fuels, however. Of these, 11 are heavily involved in underwriting dirty energy ventures.

Friends of the Earth France, Greenpeace Switzerland, Market Forces, Re:Common, the Sierra Club, the Sunrise Project and Urgewald are behind a push for the sector to align with the climate goals adopted in the Paris Agreement.

“Insurance companies are supposed to help manage risk and protect the community, but by being such laggards on climate action, they’re contributing to the kind of catastrophic impacts from which they are supposed to protect us,” said John Hepburn, executive director of the Sunrise Project.

The campaigners say insurers should avoid investment in companies that get at least 30% of revenue or power from coal and scale up finance to develop clean energy.

Elena Gerebizza of the Italian campaign group Re:Common said: “The notion that insurance companies would still be underwriting new fossil fuel projects despite everything they know about the impacts of climate change is just plain irresponsible.”

The post Insurers urged to stop underwriting coal projects, following Axa move appeared first on Climate Home News.

The protest was directed against the Louvre’s sponsorship deal with French supermajor oil company Total.

Roughly two dozen activists from the group Libérons le Louvre (LlL) silently crowded around the statue wearing black cloaks, which they removed and laid along the stairs. The symbolic river of oil stretched out from the prow of the stone ship on which the statue stands.

They reportedly handed out leaflets that read: “Total supports the Louvre / The Louvre supports Total – #zerofossile.”

The campaign group 350.org, which is part of the LlL coalition, released a statement that said: “Through its partnership with Total the Louvre Museum lends legitimacy to Total’s rogue business model. Like other fossil fuel companies, Total relies on public acceptance to continue its destructive activities. That is precisely why they strike sponsorship deals with cultural institutions.”

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No details were provided by the group or visible on the Louvre’s website regarding the nature or size of the sponsorship. The Louvre and Total’s press offices have been contacted for comment.

Museums and art institutions in the UK, including the Tate and Tate Modern, have been subject to a sustained campaign from art activists Art not Oil. In 2016, a 26-year relationship between the Tate and BP was ended after a long campaign by activists.

That group also staged a protest in the Louvre during the Paris climate talks in 2015. Ten people were arrested.

The post Anti-fossil fuel activists stage Louvre oil slick appeared first on Climate Home News.

Lawmakers split 90 to 53 in favour of ditching coal, oil and gas holdings from the €8 billion (US$9bn) Ireland Strategic Investment Fund.

The bill, brought by independent representative Thomas Pringle, is expected to pass into law in the next few months after consideration by the finance committee.

“National governments have an essential role to play in backing up their Paris pledges by ensuring public funds are well placed to support the clean energy transition, and protected from the inevitable decline of the fossil fuel industry,” said Pringle.

Analysts calculate at least two thirds of proven fossil fuel reserves are unburnable if the world is to meet the climate goals agreed by 195 countries in Paris.

Funds worth more than $5 trillion have signed up to shift their capital into cleaner sectors, according to the Divest-Invest network.

Starting out in universities, faith groups and charities, the movement expanded rapidly. Norway’s $900bn oil fund is the biggest member, albeit only shedding coal shares. Ireland is going the whole hog.

Weekly briefing: Sign up for your essential climate politics update

In an earlier debate on the bill, Green Party leader Eamon Ryan said this would a strong message to US President Donald Trump and oil man-turned-secretary of state Rex Tillerson.

“We are going to be selling your Exxon Mobil shares, sir, because we don’t believe in the future that you stand for,” said Ryan.

Trocaire, a Catholic development charity behind the political campaign, said climate change was already hurting poor communities it supported around the world.

Director Éamonn Meehan said: “The Irish political system is now finally acknowledging what the overwhelming majority of people already know:  That to have a fighting chance to combat catastrophic climate change we must phase out fossil fuels and stop the growth of the industry that is driving this crisis.”

Sustainable investors added their support, saying fossil fuel assets could become surplus to requirements – and flop financially – as clean energy gathers pace.

Ian Halstead, consultant at L&P Investment Services, said: “Climate change presents a number of risks for investors. Divesting from fossil fuels and investing in climate solutions is a sensible way for investors like the Strategic Investment Fund to manage these risks.”

The post Irish lawmakers vote to divest from fossil fuels appeared first on Climate Home News.

Its latest wheeze is big data: on Wednesday the CofE will roll out a data analysis tool to help investors keep track of the climate risks facing businesses.

Known as the Transition Pathway Initiative (TPI), it will initially monitor trends in four energy-intensive sectors: oil & gas, mining, utilities and vehicles.

“This Initiative will help inform how we assess climate risk within our investment decision making, provide a basis to judge progress of companies and inform the way we engage and vote,” said Jonathan Spencer, chair of the CofE pension’s board in response to questions from stakeholders.

“We will be prioritising sectors that are the greatest contributors to climate change. The tool will be profiling companies by sector and not by domicile or different national climate change policies.”

The tool, said Spencer, will provide a “framework for robust future engagement” with the likes of Exxon Mobil, Anglo American, Glencore and Rio Tinto, where the CofE holds shares.

Last January investors led by the Church of England Commissioners called on Exxon Mobil to explain how strong its business model was in the aftermath of the Paris climate agreement, which sees greenhouse gas emissions falling to net zero after the 2050s.

The Commissioners manage £6.7 billion in funds for the CofE.

Some of the world's largest fund managers supported no climate-related shareholder resolutions in 2015/6. Let's make a new story in 2017. https://t.co/l7ORbyXYUq

— Edward Mason (@edwardcmason) January 9, 2017

The post Church of England to launch climate investment tracker appeared first on Climate Home News.

The Divest-Invest network says 688 organisations, worth more than $5 trillion, across 76 countries are now signed up to the movement, which started with a few US universities back in 2013.

Companies, organisations and cities are among those taking part, including Amalgamated Bank, Aegon, Allianz SE, the Rockefeller Foundation and the cities of Berlin, Washington DC and Oslo.

Outgoing UN secretary general Ban Ki-moon welcomed the news. “Investments in clean energy are the right thing to do,” he said ahead of his last address to the General Assembly.

How #Trump played Gore, DiCaprio + the media for #climate fools… https://t.co/QHohT5wWYN pic.twitter.com/roQz1CXnt2

— Climate Home News (@ClimateHome) December 8, 2016

“As we enter the final weeks of 2016, the hottest year in history, the success of the divestment movement is undeniable,” said May Boeve, head of the 350.org campaign group.

“In the face of intensifying climate impacts, and regressive and anti-climate governments like the Trump administration, it’s more critical than ever that our institutions – especially at the local level – step up to break free from fossil fuel companies.”

The $5 trillion figure exceeds the value of the 1,649 listed oil and gas firms, rated at $4.65bn in 2014 by Bloomberg New Energy Finance.

The campaign has framed a “larger narrative” over the decline of fossil fuels, says today’s report by Arabella Advisors, placing the sector under “legal, regulatory, political, and cultural pressures.”

“In addition, the fossil fuel industry finds itself under investigation for potentially fraudulent climate denial and failure to disclose climate risk, following a series of investigative reports by nongovernmental organisations and journalists,” says the US-based consultancy.

“Together, these campaigns comprise a multi-faceted, increasingly global movement, with divestment providing an important on-ramp for a new generation of young climate leaders.”

The post Climate divested funds now bigger than listed oil, gas sector appeared first on Climate Home News.

Mark Campanale, a former fund manager with Henderson Global Investors, said the Carbon Tracker Initiative will soon open a New York branch to work with partners on Wall Street.

“The goal is to bring our analysis into the Wall Street mainstream on the energy side, share data and explain our carbon cost curves,” he said.

Since launching in 2011, CTI has stress tested the business case of leading oil, gas and coal companies in the context of incoming policies to tackle climate change.

Terrifying math: How Carbon Tracker changed the climate debate

Where stocks in BP, Shell, Exxon, Chevron and Peabody were long seen as safe bets, the group said the majority of their reserves were unburnable if the world wants to avoid 2C warming.

But while energy analysts and fund managers are now considering these risks in London, a different mentality wedded to fossil fuel growth remains in the US, said Campanale.

“I think they have still got a ‘climate is not to do with my job as an analyst’ mentality,” he said. ” That’s politics.”

Campanale cited a recent report released by top fund manager Blackrock which said all investors “should incorporate climate change awareness into their investment processes”.

Most of its inputs were London-based, he suggested, adding it was unclear how committed Blackrock’s US arm was on climate risk analysis.

“The folks in New York can take a different view than London. Blackrock in London are very negative on coal, but it’s hard to see if that’s shared,” he added.

That divide could explain why Blackrock voted against a climate change shareholder resolution at ExxonMobil’s AGM earlier this year.

(Pic: Carbon Tracker/2011)

The post Think tank takes “unburnable carbon” warnings to Wall Street appeared first on Climate Home News.

In March Exxon attempted to block a climate resolution by appealing to the US Securities and Exchange Commission, only for the SEC to force Exxon to hold the vote.

The oil giant was warned about its conduct in no uncertain terms: ‘It does not appear that Exxon Mobil’s public disclosures compare favourably with the guidelines of the proposal’.

That’s one side of the coin. From a very different viewpoint some divestment campaigners, including 350 founder Bill McKibben, have criticised the slow pace of progress from engagement.

McKibben is urging investors to divest instead. It’s a valid argument that has gained traction in recent years, but one I think is flawed on a number of levels.

Less than 2 hours to the Exxon AGM. I shall be telling the board they are losing the confidence of their major investors on climate change.

— Edward Mason (@edwardcmason) May 25, 2016

First, we are seeing results. Progress is being made around company engagement, and divestment as a tool for managing climate risk has limits.

I would point to progress at Statoil, Total and Shell, where following years of engagement the argument that oil companies should re-direct capital to clean investment is being accepted.

Take for example Total’s solar expenditure and its newly released climate plan where it pledges to cease drilling for oil in the Arctic.

Will engagement make a difference at Exxon, a company with the ultimate bunker mentality?

The jury is out, but investors at today’s AGM in Dallas will let CEO Rex Tillerson know they are no longer satisfied with his stance on climate science and the company’s role in a sub 2C future.

It is certainly true that engagement can’t yet claim a track record that has materially switched the business plans of big oil.

Bluffer’s guide: The oil majors, climate change and investor pressure

But engagement is as much about big finance learning to take on a whole sector as it is about oil and gas itself.

Once investors learn new tricks, they don’t go backwards and with 136 resolutions raised against the oil and gas sector in the last two years against 64 in the previous 3 years there are signs they want to learn and act.

The pace may not suit Bill McKibben or any of us, but climate change is challenging investors in ways that not even the sub-prime crisis did.

This year’s Exxon and Chevron AGM’s will see a record 16 climate related shareholder resolutions covering climate change from a wide number of angles.

For the first time, one of these resolutions has been the subject of a unique alignment of interests. Exxon has been asked to prepare a 2C business scenario for its shareholders in a resolution co-filed by the European Aiming for A coalition and New York State Common Retirement fund.

This resolution (item 12 on the agenda) and its Chevron equivalent has been supported by a large coalition of NGO’s including civil society groups who have facilitated thousands of members in 50 countries to pressure their retirement fund to vote for the resolution through their VoteYourPension platform.

Briefing: Meet the investors pushing climate reality on carbon majors

Divestment has been rejected en masse by the retirement funds industry which hold the majority of shares in Exxon.

There are already signs that some oil assets are going off market into private equity and hedge funds where Bill McKibben et al will be unable to count them, let alone influence them.

Furthermore, Unions have expressed a strong desire to ensure that this industry does not collapse in a heap forcing millions out of work and whole communities to be stranded.

The advantages of the engage and diversify approach are copious.

Firstly, governments and regulators looking for a market solution would welcome a move to diversify these companies in a non-political way without regulation or carbon pricing.

Second, investors lower their portfolio risk over the long term from a more calamitous end for big oil at a time when regulators have no choice but to react to Mr McKibben’s rapidly worsening climate scenarios.

Thirdly, employees and suppliers would be allowed a smoother transition avoiding the kind of human contagion we saw in 2008.

Finally, and not without some irony, the companies themselves and their management will be rewarded for the transition, cementing their future and allowing them to grow further.

Having demonised oil and gas for some years, making big oil part of the solution is toxic to the environment movement but like the investors they too must learn on the job.

The blunt weapon of destructive capitalism is a grim alternative we experienced only recently after 2008 and it didn’t go very well.

Risky bet: Does divestment slow or speed green growth?

Nobody is suggesting that engagement is a panacea towards a low carbon economy but it is the only strategy where we can align interests of all stakeholders to drive change.

Engagement pressure is accelerating in ways that few could have envisaged in recent years.

Global collaboration between funds, associations and campaign groups can ensure that millions of retirement beneficiaries who ultimately own the majority of Exxon shares can have their long term interests aligned with the capital that Exxon and others have at their disposal.

To drive this change, we must all stay in the game rather than exit and allow a far more dangerous off market game to ensue.

The Exxon AGM will almost certainly see a majority vote for board access by investors and a very strong vote (possibly over 30%) for a 2 degree business scenario.

When this occurs it is time for the divestment movement to realise that accountability in the investment and corporate chain is being rapidly improved.

The stationary energy industry already has many diversified companies who are transitioning and thus this is no longer a simple black and white issue as some of those companies have coal and renewable assets.

We need big oil to join those diversified companies and compete in the new transition and return each year to challenge the companies at every AGM where investors are driven by beneficiaries to vote for change.

You have to be in it to win it.

Julian Poulter is CEO of the Asset Owner’s Disclosure Project (AODP)

The post Exxon and climate change: Why it’s better to engage than divest appeared first on Climate Home News.

Supporters say they’re onto a winner. US campaign group 350 calculates 500 institutions with a total value of $3.4 trillion have made some kind of divestment pledge.

That’s a huge leap on 181 worth $50 billion in 2014, one that has seen a diverse range of investors from the Rockefeller Foundation to Yale University ditch polluting portfolios.

“It’s helping investors understand we are now past point where it makes sense to invest a penny in coal or oil. It must stay in the ground,” 350 founder Bill McKibben told a climate conference in Paris on Wednesday.

Analysis: Peabody’s climate-denying crash is a warning to investors

With divestment in the headlines and pressure intensifying on fund managers, pension schemes and universities it’s hard to argue with McKibben’s thesis.

But divestment has its critics, who argue it’s too binary a campaign that fails to acknowledge many companies – even major polluters – are exploring new business models.

“We cannot get rid of oil in just one night – we have to get real. If you want to sell a stock you have to find a buyer. People don’t get that,” says Philippe Desfosses, director of ERAFP, a French pension fund which has 4.5 million French public sector workers on its books.

“It’s great to take the moral high ground and say let’s get rid of this – but when you are running a business with 100,000 people with jobs you don’t just change with a magic wand touch.”

Report: Embrace 2C climate target to boost value, oil majors told

Desfosses – who sits on €25 billion of assets – tells Climate Home the markets are already sorting winners from the losers in the world’s looming great energy transition.

Once-mighty coal giant Peabody has declared bankruptcy, while fellow mining aristocrats Glencore and BHP Billiton are slowly tweaking their business plans to contain their exposure to lignite.

He points to France’s top oil company Total, which is rebranding as an oil and solar business and this week bid €1bn for battery-maker Saft with a view to entering the power storage market.

“When you are running such a big company it’s like a supertanker. You can change the direction and that’s what the smartest people are doing,” he says.

Investors who hold onto fossil fuel shares retain influence, he argues, especially those like ERAFP that wield significant financial clout.

That view is shared by others in the investment industry like Bill McNabb, CEO of fund management giant Vanguard which controls $3.5 trillion of assets.

“There is no impact to the income or balance sheet of the company. You are not sending a message to the company. You are better remaining an owner and being able to engage with the company,” he told the FT last week.

IRENA: Saudi Aramco float could spark renewables boom

Still, that’s where the approach of Desfosses and McNabb appear to diverge.

The head of the French pension fund is a staunch advocate of companies he is investing in disclosing their risks to climate change, threatening to sell shares if they refuse.

“We are not confrontational – but it’s our fiduciary duty to invest in a wise way,” he says.

#Vanguard‘s ‘use yr shareholder influence’ line wld be more credible if they’d ever voted for #climate resolutions. https://t.co/PQcrwBMnEA

— Catherine Howarth (@ca_howarth) May 9, 2016

Meanwhile McNabb stands accused of shying away from the climate debate by Catherine Howarth, chief executive of the Share Action campaign group.

In a statement, she says Vanguard’s backing of shareholder resolutions focused on the economic risks of global warming on company business models is “negligible”.

Upcoming AGMs of ExxonMobil and Chevron – where Vanguard holds shares – will be a “litmus test” for its desire to hold the oil giants to account for their environmental impact, she adds.

Analysis: In Paris, polluters in focus as investors shun climate risk

Penalties for ignoring climate risk may extend beyond a rap across the knuckles from NGOs, warns Desfosses, as the nature of fiduciary duty comes under scrutiny and the potential of legal action rises.

So far, evidence fund managers are taking climate risk seriously is limited. A recent survey by the Asset Owners Disclosure Project determined 246 of the top 500 investors worth $14 trillion ignored it when making investment decisions.

That’s a concern given a recent Oxford University study argues that virtually no fossil fuel power plants can be built after 2017 if the world is to avoid warming above 2C, a level deemed dangerous by governments.

Guidelines from the Financial Stability Board due later this year are expected to underline the need for fund managers to start taking carbon exposure seriously.

“It will not be long before someone says – you knew and you did nothing? So you are in breach,” says Desfosses.

“Fiduciary duty is evolving… it will be much more demanding. It is not very smart to go against the tide – and the tide is coming – it’s huge.”

The post Risky bet: Does divestment slow or speed green growth? appeared first on Climate Home News.

That is the conclusion of analysis from Carbon Tracker ahead of key shareholder votes at ExxonMobil and Chevron AGMs this month.

At today’s prices, it found the seven biggest oil majors’ portfolios would be worth around US$140 billion more if they stuck to projects compatible with a 2C warming limit.

“A lot of the socially responsible investors we were speaking to wanted to know what an oil company would look like if it was managed in line with a 2C business model,” report co-author Paul Spedding told Climate Home.

“The concern was from management: if we stop growing, we will stop adding value. We wanted to see if it was true or not. Actually, there was surprisingly little difference between a 2C business model and a growth model.”

Report: FTSE launches fossil-free, green economy index

The Paris Agreement signed by 175 world leaders in April aims to hold global temperature rise “well below 2C”. That requires carbon-cutting regulations and technologies to be ramped up, slashing demand for fossil fuels.

Coal, oil and gas producers continue to forecast carbon budget-busting demand growth for their products, particularly from Asia.

Yet recent low commodity prices have shown the downside of such bullish projections, driving dozens of coal companies into bankruptcy. Czech miner OKD is the latest to file for insolvency, following US giant Peabody.

Analysis: Peabody’s climate-denying crash is a warning to investors

On the oil and gas side, some $380 billion worth of projects have been cancelled or deferred since late 2014. High cost ventures in the Arctic, Canada’s tar sands or Venezuela’s extra heavy oil were first for the chop.

With Saudi Arabia maintaining cheap production and Iran and Iraq reentering the market, low prices could persist, with many analysts predicting $50-80 a barrel in the medium term.

Carbon Tracker estimates business as usual will only deliver better returns than a 2C scenario if oil prices soar above $120/bbl for a sustained period.

The oil companies should be preparing for managed decline, Carbon Tracker’s Spedding argued. “It makes financial sense – you don’t need an environmental reason.”

Saudi prince: From 2020, we can survive without oil

It is why shareholders are urging ExxonMobil and Chevron to “stress test” their business models against the 2C goal.

The same time last year, only 4% of Chevron investors supported a similar resolution, while Exxon blocked the vote entirely. Chevron’s board dismissed the analysis as “flawed, if not dangerous”.

Since then, Financial Stability Board chair Mark Carney has spoken out about climate risk, pushing it up the mainstream agenda.

Norway’s $900 billion sovereign wealth fund, the seventh largest investor in both firms, added its weight to the campaign this week.

The post Embrace 2C climate target to boost value, oil majors told appeared first on Climate Home News.

The FTSE Divest-Invest Developed 200 Index will replace fossil fuel companies with green alternatives.

Waste Management, Tesla Motors and Vestas Wind Systems are the three biggest low carbon firms on the list.

Kevin Bourne, managing director of database services at FTSE Russell, said: “We’ve seen a rapid expansion of the green businesses of many companies around the world.

“What’s been missing from measures of the ‘green transition’ is exposure to this growth side of the opportunity.”

The Paris Agreement signed by leaders this month “put climate risk at the top of the agenda” added Neven Graillat of BNP Paribas, which collaborated on the product.

“For the first time, investors are being offered a way to assess companies based on their green revenues.”

The post FTSE launches fossil-free, green economy index appeared first on Climate Home News.

The view of the 12 Pipestill at sundown at BP’s Whiting Refinery outside of Chicago, USA (Pic: BP/Flickr)

By Alex Pashley

Giants of the oil and gas industry spent millions of dollars last year to manipulate lawmakers and public discourse on climate change, an NGO claimed on Thursday.

Exxon, Shell and three trade associations spent US$114 million, according to data compiled by London-based non-profit organisation Influence Map.

Lobby group the American Petroleum Institute spent the most at $65 million, followed by Exxon Mobil on $27m and Shell on $22m last year.

Two smaller trade groups, the Western States Petroleum Association (WSPA) and the Australian Petroleum Production and Exploration Association totalled about $9m.

(Pic: Influence Map 2016)

In the first estimate of its kind, Influence Map analysed tax records and lobbying registers to estimate total spending. They then assessed the extent geared towards climate legislation.

Finally, they graded the players on their supportiveness of climate action, with Shell getting a D-, Exxon E- and API an F.

It comes as investors are calling for increased disclosure on where their funds are headed. Exxon is under investigation over claims it misled investors on the evidence for human-caused climate change.

While more and more investor groups are spending money on pro-climate advocacy, Influence Map estimates the amount is much smaller, at less than $5 million a year.

The post Big oil spent $115m ‘obstructing’ climate laws in 2015, NGO says appeared first on Climate Home News.

(Pic: Solvency Ii Wire)

By Ed King

Investing in coal is now on par with sanctioning child labour, according to JP Morgan Chase, one the world’s largest banks.

The US-headquartered multinational has announced it will no longer fund any new coal mines or plants in high income countries.

The high-carbon energy source is now listed alongside illegal logging, uncontrolled fire and forced or child labour as a ‘prohibited transaction’ by the bank, which holds assets of over $2 trillion.

“We believe the financial services sector has an important role to play as governments implement policies to combat climate change,” reads the bank’s environmental and social policy framework.

Report: Investors pressure mining giants to phase out coal
Report: Bloomberg climate risk initiative targets secret polluters

Funding for coal projects in developing countries will not be affected by the new rules, limiting its global impact. China, India, South Africa and Indonesia are among the world’s top coal consumers.

Ben Collins, senior campaigner at the Rainforest Action Network welcomed the decision, but urged the company to adopt tougher standards.

“In order to have a chance at stabilizing the climate, we need financial institutions to follow these commitments on coal mining with further steps to end coal financing altogether,” he said.

Still, the news will come as a further blow to a sector hit by crashing commodity process and a string of bankruptcies.

Reports from the US suggest Peabody Energy, the world’s largest private producer, is laying off staff and selling major mines as it struggles to stay afloat.

Historically JPMC has been one of the most prolific funders of coal projects. Between 2005 and 2011 it was linked with over $18 billion of investments according to the NGO Bankwatch.

Bank of America, Citigroup, Morgan Stanley and Wells Fargo have all announced plans to scale back coal financing in recent years.

The post JP Morgan: Coal investments on par with child labour appeared first on Climate Home News.

Investors are warning coal miners to be prepared for climate policies (Pic: Peabody Energy)

By Megan Darby

On Wednesday Rio Tinto, one of the world’s biggest mining conglomerates, embraced a shareholder resolution on climate change.

The politely worded submission focuses on disclosure of information. Reading between the lines, it encourages a shift away from coal – an increasingly risky bet as governments crack down on greenhouse gas emissions.

“This is an unusual event, although not unprecedented,” chairman Jan du Plessis wrote to shareholders, recommending they vote in favour of the proposal.

It is the latest mini-victory for a quietly revolutionary coalition of institutional investors known as “Aiming for A”.

Since 2012, this growing band of charities, churches, pension funds and commercial fund managers has been putting carbon majors under the spotlight. Representing US$8 trillion of assets at the last count, they are making climate concerns impossible to ignore.

So who is behind this movement? What impact are they having? And where next?

Report: Investors pressure mining giants to phase out coal

Helen Wildsmith, the coalition-builder-in-chief, talks to Climate Home over lunch.

As stewardship director for CCLA, one of the UK’s largest charity fund managers, she had been chewing over the problem for years.

It is important to understand why churches and charities like to invest in companies like energy majors in the first place.

Trustees have a duty to maximise cash available for their charitable purpose and tend to favour reliable dividend payments over fast capital growth. Wildsmith likens it to owning a house and spending the rental income, but keeping the house. Oil companies and utilities tick that box.

But Wildsmith realised there were strategic threats on the horizon, which 2009’s climate summit in Copenhagen brought to the fore.

“Quite a key moment for me in the period around Copenhagen, where I started to realise that climate change was not linear,” she says. “A lot of what I read up until that stage had accidentally given the impression that it was a linear system, almost that we could stretch the rubber band a bit too far and then correct it.

“I started realising this was a discontinuous system and we couldn’t stretch it too far or that wouldn’t be good for investors, society and the economy.”

Terrifying math: How Carbon Tracker changed the climate debate

If policymakers didn’t tackle climate change, the rise in extreme weather could damage all sorts of assets and business models. If they did, it would be severely disruptive to certain carbon-intensive sectors.

It was a different type of problem than responsible investors were used to. Rather than being limited to monitoring companies’ performance on human rights or environmental standards, it cut across their whole strategy.

In 2011, two things happened that gave Wildsmith an idea for how to address that big picture.

One was that US churches wanted to file a shareholder resolution with BP over its response to the Deepwater Horizon disaster. Wildsmith got involved and while they decided there were other ways to address those particular concerns, the idea of a resolution stuck.

The other was a “fleeting conversation” with Peter Montagnon, an ethical investment expert involved in responding to the financial crisis. “It left in my mind the sense that it’s actually quite hard for long term investors to get their voice heard, because of the day-to-day noise in the markets,” says Wildsmith.

Report: BP embraces climate change risk resolution

Her brainwave was to use shareholder resolutions to amplify the concerns of long term investors. Traditionally in the UK, these were seen as antagonistic, the preserve of activists buying a minimal number of shares to make a point. Wildsmith envisaged a more constructive approach, as part of a sustained engagement by major funds.

One of her first allies was Tessa Younger of PIRC, research partner to the Local Authority Pension Fund Forum (LAPFF).

Representing 69 of the UK’s 89 local authorities, LAPFF had a record of shareholder activism. Back in 1997, it filed a resolution to get Shell to clean up its act in the Nigerian delta.

While it can’t be said to have solved the problem – only this week, Nigerian communities lodged another lawsuit against the company – LAPFF claims credit for improvements in Shell’s approach to social responsibility.

Report: Norway’s oil-rich capital first to divest from fossil fuels

The strongest criticism of investor engagement tends to come from activists who prefer divestment from fossil fuel interests. Networks like 350 see energy majors as the enemy, to be shunned not coddled.

With eye-catching stunts and hashtags like #keepitintheground, they celebrate disruptive clean technology – with the odd pang of sympathy towards redundant coal miners.

Aiming for A, by contrast, is the work of a thousand well-mannered meetings. Long term investors value stability. They want a “smooth transition” to a low carbon economy.

At different ends of the spectrum, both are trying to resolve the conflict between a safe future climate and the profits of fossil fuel producers.

To hold global warming to 2C, scientists estimate more than 80% of coal reserves, half of natural gas and a third of oil cannot be burned. In Paris, governments agreed to a tougher “well below 2C” goal, aspiring to 1.5C.

Report: Fossil fuel divestment accelerates as pledges pass $2 trillion

It took Aiming for A three years to work up to their first resolutions, in 2015. They were anxious to build up enough support to get them passed. Filed with BP and Shell, they aimed to be “supportive but stretching”.

The most important ask was that oil majors consider the possibility climate policies could hit demand for their product. They should model how their assets would fare in a 2C world – and publish the results.

In BP’s 2016 energy outlook last month, there were signs of progress. They added a “faster transition” scenario, which was in line with the International Energy Agency’s “bridge” pathway – not the most cost-effective route to 2C, but potentially keeping it within reach.

“It is a huge move from where the company was a couple of years ago,” says Younger. “I was really pleased to see that. It was more progress than I had expected.”

But she acknowledges that compared to what the Paris agreement mandate, “it doesn’t quite get there”.

“We don’t ask them to set targets. Some people criticise it for not being strong enough, but it is horses for courses.”

Analysis: Coal, steel sectors to suffer as China pollution drive accelerates

This year, the coalition has turned its focus to mining majors: Glencore, Anglo American and – the first to respond – Rio Tinto.

It is an expanded movement, with co-filers representing US$8 trillion – a 30-fold increase on the first resolutions.

They include four of the world’s ten largest pension funds: ABP and PFZW from the Netherlands, California’s Calpers and the Canada Pension Plan Investment Board.

Even commercial fund managers have joined in, with Bruce Duguid of Hermes coordinating the latest round of interventions.

Duguid says they had voted with the coalition last year, but wanted to make sure their 40 pension fund clients backed closer involvement.

“We had a conversation with our clients earlier last year and they supported us taking a more muscular approach,” he says.

“I think that shows how institutional investors have been increasingly concerned with climate change and know that they need to help drive companies towards the long term agenda, rather than just ask nicely.”

Report: Bloomberg climate risk initiative targets secret polluters

For the miners more than the oil sector, Duguid says, climate policies bring opportunity as well as risk. While coal looks like a worse bet, copper and uranium have a role in clean electricity networks.

He sees senior management as often supportive of taking a longer term view, but under pressure to deliver immediate results.

As such, he defends the decision to demand disclosure rather than specific actions: “We want the companies to be in the driving seat, we just want to ask the right questions.”

On the back of this investor awakening, Financial Stability Board governor Mark Carney last year launched a task force to address climate risk.

Headed by Michael Bloomberg, it will propose standards of carbon disclosure across the sector, and it could make a big difference, says Duguid.

“We shouldn’t have to use resolutions for long, because it should become obvious this is what investors want and need.”

The post Meet the investors pushing climate reality on carbon majors appeared first on Climate Home News.

Coal power plants use a lot of water for cooling (Flickr/Tennessee Valley Authority)

By Megan Darby

Australia, Germany, Japan and the US are at high risk of “utility death spiral” due to a reliance on coal for power generation, a study warned on Thursday.

Fast-growing wind and solar sectors are rapidly eating into the market share of conventional power stations, in one of a range of threats to the coal sector’s value.

In the most comprehensive study of its kind, analysts at Oxford University crunched data on the world’s 100 biggest coal burning utilities and top 30 miners.

They looked not only at the climate impact, but also local water stress and air pollution concerns. The more environmental damage a utility or mining firm does, the more exposed it is to punitive regulations, protests or litigation.

Supported by Norway’s state pension fund managers, the research is targeted at investors increasingly concerned about environmental risk.

Report: Vietnam to phase out coal, invest in gas and renewables

“Investors have almost no idea about the real environmental performance of companies they own,” said lead author Ben Caldecott. “The data needed to understand this is usually not reported and if it is, it may be inaccurate or out of date. If they care to look at all, investors currently look at aggregated carbon emissions or intensity at a company level.”

Top regulator Mark Carney last year flagged up the risk of shocks if the finance sector fails to anticipate the impact of climate change – and policies to address it. In the same way the sub-prime mortgage bubble burst in 2007-8, triggering a global financial crisis, polluting companies could be abruptly revalued as the clean energy transition ramps up.

As chair of the Financial Stability Board, he set up a climate risk disclosure task force led by former New York mayor Michael Bloomberg. With a line-up of top business executives revealed in Davos last week, it aims to flush out information that sorts climate leaders from laggards.

They should be sure to demand detailed data, said Caldecott. “You actually need to interrogate the exposure of individual assets within a company portfolio, in the same way that investors should have paid more attention to individual mortgages in the mortgage-backed securities and collateralised debt obligations that caused the financial crisis.”

The post Australia, Japan, US coal burners face ‘utility death spiral’ appeared first on Climate Home News.

(Pic: Pixabay)

By Megan Darby

Anglo American, Glencore and Rio Tinto are facing pressure to phase coal out of their portfolios.

Investors worth US$4 trillion are planning to co-file shareholder resolutions later this month, calling on the mining giants to reveal their exposure to climate risk.

The Church of England, UK local authority pension funds and Aviva are among those backing greater transparency over how firms are preparing for global decarbonisation.

Helen Wildsmith, ethical investment specialist and founder of the ‘Aiming for A’ coalition, said: “These resolutions are a vital opportunity for shareholders to signal their support for the development of low carbon transition plans.”

Report: Paris climate pact spells slow death for fossil fuels

At least two thirds of proven coal, oil and gas reserves cannot be burned if global warming is to be held to 2C, analysts estimate.

In Paris on Saturday, 195 countries agreed to hold temperature rise “well below 2C” and aim for a more stringent 1.5C limit. That goal implies rapid reductions in polluting fuel use.

With “unmistakable policy tightening” and technological progress in clean energy, Wildsmith said it “has never been more crucial” for carbon-intensive businesses to respond.

The resolutions urge miners to support clean energy research and development, green their own operations and – most significantly – maintain “a portfolio of assets resilient to future energy scenarios”.

Earlier this year, 98% of shareholders in Shell and BP backed similar proposals. Part of a wave of investor advocacy, they force fossil fuel majors to consider the threat greenhouse gas emissions curbs pose to their business models.

Analysis: Who’d buy a coal mine? Two very different bids

Edward Mason, head of responsible investment at the Church Commissioners for England, who are leading the engagement with Glencore, urged more funds to join.

He said: “The BP and Shell resolutions have helped change the way the European oil and gas companies integrate climate change into their business strategies. We are now keen to see the same from the major mining companies.”

It comes as coal prices are in the doldrums on slower than expected demand growth from China.

Peabody, the world’s largest private pure-play coal company, has been haemorrhaging value. Its shares tumbled 12.6% on Monday, the first day of market opening after the Paris Agreement.

Some major investors are ditching multi-billion dollar coal holdings on climate grounds, including Norway’s sovereign wealth fund and California’s two largest pension funds.

Anglo American wholly owns seven thermal coal mines in South Africa, according to its website. Glencore has interests in more than 30 coal mines worldwide, while Rio Tinto produces coal from five mines in Australia. All three firms also trade in other commodities, including metals and precious stones.

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(Pic: UNFCCC/Flickr)

By Gerard Wynn in Paris

High-carbon companies may lose the support of major, long-term investors, if they push back against growing pressures to disclose their carbon emissions, and to change their boards and corporate direction.

To date, the most visible investor impact of climate change has been a fossil fuel divestment movement, targeting coal stocks. But a bigger, quieter shift may have started, away from less engaged polluters, towards lower carbon, and more “climate aware” higher carbon, companies.

The question is how quick the shift is.

Businesses, investors and regulators are gathered in Paris on the side lines of a UN conference, where countries are meant to reach a new global climate agreement this week.

Investors meeting in Paris claim that their attitude to climate risk is changing. They point to the following pressures.

IN DEPTH: Breaking energy and carbon analysis

In a worst-case scenario, the most polluting companies might see a vicious cycle of exiting responsible investors, leading to higher costs and lower returns, with the opposite trend in green technologies.

What is causing the change?

First, there is growing pressure for both companies and investors to measure their carbon footprints. Notably, the global Financial Stability Board (FSB) last week said it would standardise rules for companies to report their carbon emissions and climate exposure. While the FSB code would be voluntary, it would be effectively mandatory if widely adopted.

Regulators are motivated to head off a climate crisis, and avoid the kind of mispricing of mortgage assets that led to the global financial crisis.

The FSB follows France, which earlier this year passing an “Energy Transition Law” rule, requiring companies, their lenders and investors, to disclose climate risks. Sweden’s minister for financial markets said in Paris last week his country would legislate, too, if the private sector failed to regulate itself.

Second, there are new tools in the market for investors to re-allocate capital, where the classic example are green bonds. These are a pin-prick in the global bond market to date, with $66-532 billion of issued green bonds outstanding, depending on how these are defined, compared with a global bond market worth tens of trillions. Nevertheless, the green bond market is growing rapidly.

Third, investors are increasingly sharing best practice, through groups such as the Carbon Disclosure Project, the Institutional Investor Group on Climate Change (IIGCC) and Ceres.

It seems that, when it comes to climate change, investors are motivated by a combination of profit maximisation and fear.

Regarding profit maximisation, a low-carbon transition and declining cost curve for renewables may imply a sweeping reallocation of resources and technological revolution, with all the opportunities that may bring. Regarding fear, if one day polluting companies are held liable for contributing to climate change, so might their investors. The New York Attorney-General’s investigation of whether Exxon misled investors shows why considering climate risk will become a part of standard fiduciary responsibility.

So much for the drivers. What are investors doing?

First there is a divestment movement which this year drew two of the world’s biggest asset owners. In May, the French insurance firm, AXA, which has 1.3 trillion euros of assets, decided to divest from 500 million euros worth of coal-related assets. And in June, Norway’s parliament agree that the country’s $900 billion sovereign wealth fund should divest from coal.

Divestment got a further push in September this year when the state of California passed its “Investing with Values and Responsibility” ruling, requiring state public pension funds to sell coal miners.

Second, investors are pressuring company boards. Two of the biggest U.S. pension funds, CalPERS and CalSTRS, have coordinated a campaign to request “proxy access” rights to nominate board members.

Measurable impacts

The idea is either for shareholders to nominate their own executives, to secure more “climate confident boards” in the words of CalSTRS CEO Jack Ehnes in Paris last week, or more likely, exert greater influence on a company’s own nominations.

And third, by measuring the carbon emissions of their portfolios, they are increasingly equipped to act, by exiting the worst performers.

An example of the trend is the growing list of investors signed up to the “Montreal Pledge”, to measure and disclose annually their portfolio carbon footprint, and the related Portfolio Decarbonisation Coalition, which aims to eliminate carbon emission from a select portion of managed assets.

For sure, there are limits to the impacts of these new trends.

In particular, institutional investors tend to focus on liquid assets such as bonds and equities, rather than infrastructure. But many low-carbon projects, in efficiency and renewable energy, are capital-intensive infrastructure projects which need upfront cash.

Securing all of the trillions need to finance a low-carbon transition may require greater political focus, abandonment of fossil fuel subsidies and the introduction of carbon prices, as well as an ambitious Paris deal – a big ask for governments this week.

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Michael Bloomberg will lead initiative to preserve financial stability from climate threats (Pic: US Navy)

By Megan Darby in Paris

Michael Bloomberg will spearhead an initiative to manage threats posed by climate change to financial stability, it was revealed in Paris on Friday.

The UN envoy and former New York Mayor was named as chair of an industry task force for the Financial Stability Board (FSB), on the sidelines of COP21.

His role will be to get companies to reveal more information about their exposure to extreme weather impacts, climate lawsuits and a clean economic shift.

“It’s critical that industries and investors understand the risks posed by climate change, but currently there is too little transparency about those risks,” said Bloomberg.

“While the business and finance communities are already playing a leading role on climate change, through investments in technological innovation and clean energy, this task force will accelerate that activity by increasing transparency. And in doing so, it will help make markets more efficient, and economies more stable and resilient.”

Report: G20 leaders disappoint climate campaigners with weak statement

The FSB proposed such a task force to leaders of major economies at last month’s G20 summit in Antalya, Turkey. It was little discussed at the meeting, as terrorism and conflict dominated the agenda.

But the high-profile announcement at UN talks, which aim to secure an international carbon-cutting pact, showed it was going ahead regardless.

Mark Carney, FSB chair and Bank of England governor, has driven climate change up the agenda for financial regulators.

He commissioned a BoE report into the issue, which flagged up three main concerns. Forecast increases in extreme weather pose a direct threat to property. Victims of climate impacts could sue major emitters or negligent companies. And as governments seek to curb greenhouse gases that cause global warming, carbon-intensive businesses are set to lose market share to cleaner rivals.

Presenting that report in October, Carney warned there could be market shocks if businesses, investors and policymakers fail to anticipate these effects. Due to short-term business and policy cycles, he said they were failing to prepare for slow-burning trends: “Once climate change becomes a defining issue for financial stability, it may already be too late.”

In Paris, he added the risks were “likely to grow with time” and hailed Bloomberg as the “ideal leader” for the task force.

Terrifying math: How Carbon Tracker changed the climate debate

Al Gore, former US vice president, covered similar ground at the Paris summit on Thursday. He endorsed research by Carbon Tracker showing that US$2 trillion worth of fossil fuel assets are unburnable as governments aim to hold global warming to 2C.

“Investors need to look at the pattern that is unfolding, lest they be trapped into holding stranded assets,” he said. “There are active efforts to fool investors, by the way,” he added, citing an investigation into allegations Exxon deceived the public about climate risk.

To avoid a crash, Gore recommended they sell the riskiest carbon-intensive assets and put money into “fantastic new opportunities” like renewable energy.

Analysts at Carbon Tracker found that no new coal mines were needed in a 2C world and oil demand should peak by 2020.

While the latest government policies leave the world on course for 2.7C of warming, negotiators in Paris are seeking to ramp up ambition over time.

Businesses and governments should check their economic plans fit with the 2C goal, said the think tank’s Anthony Hobley: “It is critical that we all get used to doing 2C stress tests.”

Bill McKibben: Exxon’s power is ‘weakening daily’

If investors do not reroute their cash to clean sectors in an orderly way, he added they could be storing up a shock like the sub-prime mortgage crash late last decade.

Mindy Lubber, president of sustainable investor network Ceres, agreed: “Climate change is one of the greatest financial risks facing us. This could be the next sub-prime meltdown.”

More than 400 investors managing US$24 trillion worth of assets have signed up to help get money flowing into climate-friendly projects. Many lined up to praise the FSB initiative.

Stephanie Pfeifer, chief executive of IIGCC, a European network of Institutional Investors with €13trn in assets, said: “Access to high quality information can only help accelerate the reallocation of capital by investors in ways that will accelerate the low carbon transition.

“More consistent and reliable carbon disclosure will make it easier for investors to evaluate climate risk in their portfolios and understand where the opportunities in clean energy and other essential low carbon technology lie.”

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Emissions from fossil fuels undermine charitable endeavours, argues Christopher McCall QC (Flickr/Steven Depolo)

By Megan Darby

Charities aiming to tackle poverty, health or environmental issues should ditch shares in fossil fuels, a leading British lawyer has advised.

Christopher McCall QC, an expert on “fiduciary duty”, argued that by damaging the climate, such investments may conflict with the charities’ missions.

That means trustees should consider divesting from coal, oil and gas holdings regardless of the financial implications, he said.

“What we have is the first authoritative insight into what the law says about this possibility of conflict,” explained Luke Fletcher, partner at law firm Bates Wells Braithwaite, which commissioned the opinion.

“Investment issues are often seen as specialist matters, but this in a sense goes to the nature of a charity, its reason for being. That is something trustees will need to think through.”

McCall’s opinion is based on law in the UK, where charities own an estimated £90 billion (US$136 billion) worth of assets.

But similar principles apply in other jurisdictions, Fletcher added: “I would be very surprised if it was not highly influential elsewhere.”

Legal opinion on charities and carbon intensive assets

It updates the thinking around ethical investment, which has changed little since a landmark case in 1991.

At that time, the Bishop of Oxford sought to make the Church Commissioners divest from companies profiting under the apartheid regime in South Africa.

The High Court ruled that charities should maximise funds for their stated purpose and only rule out investments where they conflicted with that purpose. A cancer charity could reasonably exclude tobacco companies, for example.

In recent years, evidence has emerged that the business plans of traditional energy majors clash with an international goal to limit global warming to 2C.

Terrifying math: How Carbon Tracker changed the climate debate

Carbon Tracker estimates US$2 trillion worth of capital is going to extract coal, oil and gas that cannot be safely burned under that cap.

Greenhouse gas emissions from burning those fuels has been linked to rising temperatures, environmental damage and health impacts. Malaria is expected to spread to more regions, for example, threatening aid efforts to limit the disease.

In light of those impacts, hundreds of faith groups, universities, local authorities and charities have pulled funds from fossil fuel companies.

Kate Rogers, head of policy at Schroders and Chair of the Charity Investors Group, said: “We are seeing a trend of charities and others asking for advice on how to avoid carbon intensive investments – this opinion looks likely to lead to further demand for this kind of advice from charity investors.”

Report: Europe’s largest insurer Allianz to pull funds from coal

Aside from ethical concerns, investors are increasingly wary of the financial risks associated with fuel stocks that may be unburnable as governments crack down on emissions.

Insurance giants Allianz and Axa are shedding shares in coal, as is Norway’s sovereign wealth fund. Together, they manage more than $4 trillion worth of assets.

James Leaton, research director at Carbon Tracker, told Climate Home investors don’t want to see companies “wasting capital” on assets that may not be needed.

“There is a clear financial argument for reviewing your demand expectations for your product and what you are investing.”

Solar v coal: Can India shift from fossils to sunbeams fast enough?

The think tank’s latest report concludes no new coal mines are needed and oil demand will peak in 2020, under a 2C scenario.

Most exposed to a potential downturn in demand is the US, with $412bn of uneconomic projects, followed by Canada, China, Russia and Australia.

The latest national policies put the world on track for 2.7C of warming, analysts project, implying more fuel will be burned.

Even on that trajectory, “there would still be a huge overhang of coal,” said Leaton.

Negotiators in Paris next month are seeking a global deal to drive deeper carbon cuts over time and hold temperatures to 2C. Beyond that threshold, scientists warn of increasingly severe impacts such as sea level rise, flooding and drought.

The post Charities should ditch fossil fuel investments, says top lawyer appeared first on Climate Home News.

(Pic: Pixabay)

By Megan Darby

Allianz will withdraw investment from coal companies over the next six months, a top executive told German state broadcaster ZDF on Monday.

The Munich-based insurer, which manages €2 trillion worth of assets, is divesting from mining firms and utilities that get more than 30% of revenues or power from coal.

Chief investment officer Andreas Gruber said it would double investment in wind power to €4 billion over the next few years.

Campaigners welcomed the low carbon shift, which comes the week before world leaders meet in Paris to thrash out a global climate deal.

Nicolo Wojewoda of 350 said: “As the world’s largest insurance company, Allianz knows a thing or two about risk – and there’s no greater risk for the climate than continuing to invest in an industry that is wrecking the planet.

“Divestment from coal is a heartening first step; ultimately, however, 80% of all fossil fuel reserves need to stay in the ground to avoid dangerous and irreversible climate change.”

Solar v coal: Can India shift from fossils to sunbeams fast enough?

The financial giant is the largest asset manager yet to announce its departure from the most polluting fossil fuel.

It follows French counterpart Axa, which in May committed to sell €500 million worth of coal holdings, and Norway’s $900 billion sovereign wealth fund.

An estimated US$2.6 trillion worth of funds had committed to fully or partially divest from fossil fuels by September.

The moral case for cutting ties with the climate-damaging sector has got a boost from coal’s recent crash in value. A slowdown in demand growth from China has driven global coal prices down to half their 2011 level.

Michael Liebreich, founder of Bloomberg New Energy Finance, said at a webcast briefing on Tuesday those who bought coal shares in 2013 would today have lost 75% of their investment.

The Allianz Group employs 147,000 people and operates in over 70 countries, according to its website.

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(Flickr/ Glenn Euloth)

By Alex Pashley

Climate change is becoming a growing source of risk to the financial community, the Prince of Wales said on Tuesday.

Investors must consider whether to scrap fossil fuel holdings and bet on lower-carbon alternatives to reduces future losses, he said in a recorded video address to a London event.

Charities’ continued investment in high carbon assets may represent a “significant conflict to their overall missions and objectives”, he added.

As world leaders prepare to strike a global warming accord in Paris in December, Prince Charles said a “strong signal” from the capital markets would be key to the implementation of an agreement.

Report: Prince Charles: Nature could go “bust” unless we protect it
Report: Prince Charles mocks climate sceptics in Royal Society speech

He said: “All investors must decide if they will be ‘future takers’ – in other words, those who ignore the risks from climate change, to the potential detriment of long-term returns…

“…or ‘future makers’ – those who recognise the magnitude of longer-term risks and seek to reduce the level of global warming through their investment and engagement activities.”

To avoid the 2C danger zone by the end of the century, two-thirds of fossil fuel reserves must stay in the ground, scientists say.

That would make many coal mines, oil rigs and gas fields worthless, sending shockwaves through the financial system.

Prince Charles cited a report by consulting firm Mercer who said companies that avoid “stranded assets” would have more secure financial futures. Though he lamented it is still difficult to switch between pension funds that follow such a practice.

Next in line to the British throne, Prince Charles is a prominent climate action advocate, raising the issue on a US tour earlier this year.

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Norway has one of the world’s highest GDP per capita, due in part to its abundant oil wealth (credit: Pixabay)

By Alex Pashley

The capital of Europe’s largest holder of oil and gas reserves blacklisted all fossil fuel assets on Monday, as its new-look city council set out a greener agenda.

Oslo agreed to shed oil and gas bets from its $9 billion pension fund after losing coal in March, and cut carbon emissions 95% within fifteen years compared with 1990 levels.

“We are very happy to announce that Oslo will take responsibility for the climate, both through our own policies and our investments,” said Lan Marie Nguyen Berg of the Green Party in Oslo.

The party, which wants to stop oil production, won the third most votes in local elections last month converting it into a king-maker, Bloomberg reported.

The move follows Norwegian lawmakers’ decision to divest its huge $890bn sovereign wealth fund of an estimated $8bn coal holdings in June.

That gave a spur to the global divestment campaign, which last month had 450 institutions in 43 countries managing $2.6 trillion pulling money out of fossil fuels, according to a study.

Report: Fossil fuel divestment accelerates as pledges pass $2 trillion

Arild Hermstad, leader of activists Future in Our Hands hailed Oslo’s decision as a “brave move” weeks before a UN climate summit in Paris, and said the city council would work with other funds to invest ethically.

He said: “There’s a strong symbolism when the capital city of our oil producing nation says “No” to investing in fossil fuels. It shows that fossil fuels are history, and that shifting away from them, and towards renewables, is the future.”

Nguyen Berg said it was a “sound financial decision” given the effect of slumped energy prices on the economy which last year relied on oil and gas sales for 45% of export revenue.

“This policy change will protect our pensions from being invested in stranded assets.”

The post Norway’s oil-rich capital first to divest from fossil fuels appeared first on Climate Home News.

Pic: Light Brigading/Flickr

By Alex Pashley

A campaign to blacklist fossil fuel investments has grown exponentially on a year earlier as pension funds and foundations joined en masse, a report claimed on Tuesday.

Coal, tar sands and other polluting assets in funds representing $2.6 trillion have been now flagged for divestment by 430 institutions and 2,040 individuals, according to US consultancy, Arabella Advisors.

That is a 50-fold increase on pledges made by last September at a high-profile climate summit in New York, the Washington DC-based group, which advises philanthropists on social investments said. Campaigners had hoped it might triple.

The grass-roots movement hatched on American university campuses in 2011 has broadened from faith-based groups and NGOs to wealthy private corporations, driving the surge.

Norway’s colossal sovereign wealth fund, which pledged to ditch $8 billion of coal holdings in June, has been joined recently by California’s state pension funds and the Canadian Medical Association.

Actor and environmentalist Leonardo DiCaprio became the latest to re-route his charitable foundation’s assets into green projects.

(Credit: Arabella Advisors)

“If these numbers tell us anything, it’s that the divestment movement is catching fire,” said May Boeve, executive director of campaigners 350.org.

“Since starting on the campuses of a few colleges in the U.S., this movement has struck a chord with people across the world who care about climate change, and convinced some of the largest and most influential institutions in the world to begin pulling their money out of climate destruction.”

Low-carbon transition

To cap global warming low-carbon technologies need to be deployed on an enormous scale.

Up to a $1 trillion a year is needed to achieve this, according to the UN’s top climate official, Christiana Figueres.

More capital is flowing to climate-fighting projects, said the study. Institutions and individuals worth $785 bn in assets have pledged to re-route divested funds into clean energy.

Those investments offered “one of the clearest, no regret choices ever presented to human progress,” said Figueres, who will steer a December summit in Paris to get a climate pact between 196 nations.

She was speaking at Climate Week in New York, which had set a series of announcements to spur progress towards the crunch conference in the French capital.

The idea of fossil fuel assets posing a risk to companies’ portfolios as oil rigs and gas fields become uneconomic as emissions are capped is catching on.

“This extraordinary figure shows the Divestment campaign is hugely successful in putting the issue of unburnable carbon on the agenda of investment institutions,” said Anthony Hobley, chief executive of research outfit the Carbon Tracker Initiative.

“However, most investment mandates would not permit exclusion of a sector on purely ethical grounds. We need to give them a financial basis to act, that is Carbon tracker’s role. However, foundations and endowments who can take such action send an important signal and may find there is a financial benefit to boot.”

The report cited analyses from financial institutions such as HSBC, Citigroup and the Bank of England regarding so-called ‘stranded assets’.

The post Fossil fuel divestment accelerates as pledges pass $2 trillion appeared first on Climate Home News.

Jerry Brown, the Governor of the world’s eighth-largest economy (Flickr/ Steve Rhodes)

By Megan Darby

California’s two largest public pension funds are set to ditch coal holdings after a state assembly vote on Wednesday.

Lawmakers backed the “investing with values and responsibility” bill by 43-27, as part of the state’s push to tackle climate change. Governor Jerry Brown is expected to rubber stamp the law in the next few days.

Worth a combined US$500 billion, CalPERS and CalSTRS will become the first US funds to divest on such a large scale.

“Coal is losing value quickly and investing in coal is a losing proposition for our retirees; it’s a nuisance to public health; and it’s inconsistent with our values as a state on the forefront of efforts to address global climate change,” said Kevin de Leon, the state’s Democratic senate leader.

“California’s utilities are phasing out coal, and it’s time our pension funds did the same.”

Report: Divestment campaign swells as 100 trusts worth $5bn sign up

Under the bill, the pension providers must sell shares in companies that get half their revenue or more from mining “thermal” coal – the kind used in power generation.

Calpers has investments worth US$100-200 million meeting that definition, it said, including stakes in Peabody Energy and Arch Coal. For CalSTRS, the figure is around $40m.

Campaigners hailed the decision.

“This is a big moment for California, and for everyone around the world standing up to the most powerful and destructive industry in history,” said May Boeve, executive director of 350.org.

“Today’s vote is so meaningful because it sends a strong message: political leadership on climate change means being willing to stand up to powerful moneyed interests, and call out the destructive practices of the companies causing the climate crisis.”

Citigroup: Coal mining sector running out of time

Scientists have calculated more than 80% of known coal reserves worldwide cannot be burned if the global warming is to be held to 2C.

Half of natural gas and a third of oil also needs to stay in the ground, they found, to meet the international climate goal.

Yet energy majors continue to base their business plans on rising fossil fuel demand growth. Some are engaged in high cost ventures, such as Arctic exploration, that analysts say cannot pay off in a 2C world.

Boeve called on California to go further, divesting from oil and gas and banning shale gas fracking.

California took a slightly looser definition of coal company than adopted by Norway’s oil fund, the biggest globally to divest so far.

Norwegian lawmakers agreed to withdraw finance from firms that get more than 30% of revenues from mining. It also targeted power companies that generate more 30% of their output from coal. The total value at stake was estimated at $8 billion.

Report: Banks urged to halt coal finance before Paris summit

Meanwhile, six ethical banks with assets exceeding €15 billion from Bolivia, Germany, Netherlands, Sweden and the US have pledged to stop financing coal.

ASN Bank, Banco Fie, Ekobanken, New Resource Bank, Ethikbank and Umweltbank signed the Paris Pledge.

Advocacy group Bank Track is encouraging other private banks to take that step ahead of a critical climate change summit in Paris this December.

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