European Union green funds are investing in some of the world’s largest coal companies as they expand their operations, according to Climate Home News.
They are scaling up activities in defiance of a 2021 UN agreement that requires countries to reduce their use of dirty fossil fuels. European investors hold at least $65 million worth of shares in major coal companies in China, India, the United States, Indonesia, and South Africa.
Together, these companies emit around 1.393 million tonnes of carbon dioxide (CO2) into the atmosphere each 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 of the firms analysed are members of the Glasgow Financial Alliance for Net Zero (GFANZ). Its members pledge to align their portfolios with climate-friendly investments.
However, since the signing of the Glasgow Climate Pact, global coal capacity has, on the contrary, increased. Coal miners in China, India, and Indonesia also stepped up to meet the growing demand.
European leaders, meanwhile, strongly opposed the move, with EU President Ursula von der Leyen stating that the bloc was “very worried” about China’s expanding coal production.
Financing of coal production expansion
Climate Home revealed investments in the biggest polluters in the coal sector as part of a wider investigation by Voxeurope. It tracked the assets of funds that disclosed information under the EU’s sustainable finance directive.
The companies are planning a major expansion of coal production, according to the influential Global Coal Exit List compiled by German non-governmental organisation Urgewald.
The green funds with stakes in these coal mining companies are managed by Fideuram, a unit of Italy’s largest bank Intesa Sanpaolo, the US-based AllianceBernstein and Mercer. The latter is a subsidiary of Marsh McLennan, the world’s largest insurance broker.
A Mercer spokesman also reported that it was an Article 8 fund that held shares in NTPC and China Resources Power Holdings. It also had an exclusion policy to avoid investing in companies that derived more than 1 per cent of their revenues from thermal coal mining.
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.
