In the Wake Of A COP26-Led Pledge To Transition Away From Coal, Wall Street Takes Notice
November 8, 2021–When the United Kingdom‘s COP26 Presidency declared a major agreement on coal financing last week, some of the biggest coal-producing and consuming countries were noticeably absent: India, China, Australia and the United States.
It was significant on multiple counts. First countries are significantly falling short of the emissions reductions needed to keep the Earth from warming within the target 1.5 degree Celsius. A recent UN report noted that 15 major fossil fuel producing countries plan to continue production.
Second, new coal projects in India and Australia are putting locals at risk of losing their land.
Adani Group: New Coal Mines Vs Local People
One group, in particular, is at the center of controversy in both countries. Locals at risk from new and existing coal projects owned by the Adani Group have been protesting for the sake of their land and health. To date, governments in both countries have largely supported the controversial group, even ordering police to arrest protestors.
The protests culminated into a movement called “Stop Adani.” In India, the government’s apparent support for the Adani Group has drawn complaints about “crony capitalism,” Fortune Magazine reported earlier this year.
Double Talk By Major Banks
While it’s significant that locals are impacted in India and Australia, the issue of financing is quickly gaining traction around the world.
Moreover, as the COP26 Climate Conference takes place, greater attention is going to pledges and existing deals. Some astute observers are finding that business and government leaders are pledging climate action while continuing side deals to fund controversial projects. But signs of change are emerging.
For example, in groundbreaking reporting earlier this week by the U.K.-based Financial Times, reporters took a close look at the financial sector’s support for carbon-intensive sectors.
“The ties between financial institutions and fossil fuel companies stretch from funding coal mines, backstopping debt issuance and lending directly to power producers,” the FT reporters said.
Their report looked closely at BNY Mellon, a global investment company with $45 trillion of assets under its custody and $2.3 trillion in assets under its management. The bank’s subsidiary, BTA Institutional Services, was in the process of financing the Adani Group’s Carmichael coal mine in Queensland, Australia.
Protests Outside Bank Add To Pressure
On Friday, however, the bank announced it is breaking ties with the Adani Group in Australia. According to the Financial Times, the bank cited concerns with ESG. According to the website Market Forces, the bank had faced a barrage of protests outside its headquarters ahead of its decision. According to the Market Forces site, BNY Mellon issued the following statement:
“After review, BNY Mellon has decided to resign from all legacy transactions with Adani in Australia and will not pursue additional transactions with Adani in Australia. BNY Mellon has determined this business is not aligned with our ESG [environmental, social and governance] principles.”
Oddly, the bank’s statement does not appear to be readily available on the company’s website among its press statements. The GER requested the statement from the company’s media relations team but did not receive it.
ESG is a growing field in the corporate sector, as investors and employees take greater notice of companies’ impact on communities, the environment, climate and other factors.
Coal Pledge By Countries And Others
Meanwhile, the Nov. 4 COP26 agreement included 27 countries, some states within countries, such as Oregon and Hawaii, and over 20 organizations. Its key points are as follows:
- To transition away from unabated coal power generation in the 2030s (or soon after) for major economies and in the 2040s (or soon after) globally;
- To stop building new unabated coal-fired power generation projects and to end direct government support; and
- to support to affected workers, sectors and communities.
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