Mizuho and Mitsubishi UFJ among banks that gave coal sector over $1.5 trillion in three years

Shanghai – Financial institutions channeled more than $1.5 trillion into the coal industry in loans and underwriting from January 2019 to November 2021, despite many having made “net zero” pledges, a report by a group of 28 nongovernmental organizations shows.

Cutting coal use is a key part of global efforts to slash climate-warming greenhouse gases and bring emissions down to net zero by the middle of the century, and governments, firms and financial institutions worldwide have pledged to take action.

But banks continue to fund 1,032 firms involved in the mining, trading, transportation and use of coal, the research shows.

“Banks like to argue that they want to help their coal clients transition, but the reality is that almost none of these companies are transitioning,” said Katrin Ganswind, head of financial research at German environmental group Urgewald, which led the research. “And they have little incentive to do so as long as bankers continue writing them blank checks.”

The study said banks from six countries — China, the United States, Japan, India, the U.K. and Canada — were responsible for 86% of global coal financing over the period.

Direct loans amounted to $373 billion, with Japanese banks Mizuho Financial Group Inc. and Mitsubishi UFJ Financial Group Inc. — both members of the Net Zero Banking Alliance — identified as the two biggest lenders.

Mizuho said in a statement that the report did not reflect the “actual situation.” It said it was further developing sustainability strategies with clients via services such as transition finance and consulting.

Mitsubishi UFJ did not immediately respond to requests for comment.

Another $1.2 trillion was channeled to coal firms via underwriting. The top 10 underwriters were Chinese, led by the Industrial and Commercial Bank of China (ICBC) with $57 billion. It did not respond to a request for comment.

Institutional investments in companies still developing coal assets amounted to $469 billion, led by BlackRock with $34 billion.

The U.S. asset manager declined to comment Tuesday, but chief executive Larry Fink wrote in January that “divesting from entire sectors … will not get the world to net zero.”

“Foresighted companies across a wide range of carbon intensive sectors are transforming their businesses, and their actions are a critical part of decarbonization,” he wrote in a letter to fellow chief executives. BlackRock’s total coal-related share and bond holdings over the period stood at $109 billion, the NGO report said.

Comparative coal-funding figures for previous years were not immediately available. Other research studies, however, have shown that coal investment is on the decline.

The coal sector is responsible for nearly half of global greenhouse gas emissions. More than 40 countries pledged to end coal use following climate talks in Glasgow in November, though major consumers such as China, India and the United States did not sign up.

More China-invested overseas coal-fired power capacity has been canceled than commissioned since 2017, according to research from the Center for Research on Energy and Clean Air (CREA) last June.

Nearly all internationally available development financing is now committed to reducing or ending investment in coal-fired power after moves by China and the Group of 20 to stop supporting new projects overseas, research from Boston University’s Global Development Policy Center showed in November.