Sep 092015
 
By Yann Louvel and Greig Aitken, BankTrack, 9 September 2015

We’ve just published the latest additions to our series of coal bank briefings, and it’s a triple whammy of information assessing the coal finance and associated policies of the UK’s three biggest banks: Barclays, HSBC and RBS.

The three also happen to be the UK’s top three coal banks, having coughed up a combined total of more than £30 billion for the most climate-damaging fossil fuel sector between 2005 and April 2014. The new briefings focus on each bank’s policy approach to coal mining and coal power finance, and describe a variety of legacy investments to the coal industry that are still looming large with damaging impacts for the environment, the climate and local communities.

At the policy level, the picture is one of fairly slow, incremental evolution across the UK banking sector’s big boys – a range of coal policies have been in place for several years but have evidently not been restrictive enough to curb persistently high coal financing. (The infographic below shows how Barclays, HSBC and RBS are firmly established in the world’s top 20 coal banks, based on the most recent BankTrack research.) As for the featured dirty legacy investments, the briefings capture the horrendous human rights impacts that bank investments for coal mine projects have a pronounced tendency to catalyse in under-developed parts of the world.

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Things may be changing, however, if the publication just last week of RBS’s energy financing report for 2014 is anything to go by. We’ve been waiting all summer for the bank to publish this yearly review, curious to find out if this taster – which sat on the sustainability section of the RBS website for several months in advance of the full 2014 report – would be matched by further candour in the report itself:

“22% of our general lending to our top 25 power customers is funding coal and gas energy generation, and 6% is funding energy generation via renewables.”

This snapshot of RBS’s power sector lending in 2014, alas, did not survive in the same frank form, but is in there (page 9 of the report) and shows starkly that RBS’ top 25 power customers were twice as involved in coal power generation than in renewable power generation, in terms of revenue.

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However, as RBS has been keen to emphasise in its promotion of the new report, for the first time they have disclosed the bank’s lending to the coal mining sector: a slender £217 million which equated to less than 0.05% of the bank’s total lending in 2014. A small figure indeed in the big scheme of things, and certainly in comparison to the amount doled out to the bank’s biggest energy sector beneficiary, oil and gas, which received £10.6 billion (1.9% of total lending in 2014). Disappointingly, this new oil and gas lending figure represents a small rise on the 2013 figure.

How to interpret this new coal mining financial data, particularly if RBS is seeing fit to come clean and put it out there now for the first time? Surely it’s time to knock that £217 million down to zero, and keep it there.

RBS was the first UK bank to announce in 2014 that it was ending its financing for significant mountaintop removal coal producers in the US (Barclays did likewise in March this year). BankTrack believes that the bank now has the ideal opportunity to go the final mile and completely end its exposure to the climate-busting coal mining sector. And changing realities at RBS make the argument more compelling than ever: the bank’s operational pull-out from many overseas markets, including China and India, to focus its business on the UK and western Europe now leave it with no excuses for continuing its financial life support for an industry in its death throes.

Bank of America and Credit Agricole have set the pace in recent months by announcing that they are severing ties with coal mining companies. RBS should now follow suit. BankTrack’s Paris Pledge initiative provides a way for banks to phase out their support for coal mining and power ahead of the UN climate negotiations in Paris set to get under way in less than three months from now.

Barclays and HSBC should also be taking note: first, they must now follow RBS and disclose their own financing numbers for coal mining and other energy sectors; and second, that the back pages of our new coal bank briefings issue them with the same Paris Pledge invitations.

 

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