Coal divestment of global financial institutions double in three years

Whilst European FIs are leading coal divestments, FIs from Asia are also rapidly increasing. 

Global financial institutions (FIs) divesting from coal have doubled in the last three years, the Institute for Energy Economics and Analysis (IEEFA) reported. 

Whilst it took six years for the first 100 FIs to adopt policies to steer away from coal, the number of FIs has grown in over three years. 

“We see two prominent trends which are redefining capital markets. First, we see more financial institutions committing to investment policies that are moving away from fossil fuel projects,” IEEFA’s debt markets leader for Asia Pacific Christina Ng said.

“And second, we are seeing many of these institutions revising their policies and strengthening them as the market increases its knowledge of climate risk as a source of systemic risk to the global financial system. Institutions are getting tougher on what they will finance, and they have identified coal as a risky investment. They see climate risk as a financial risk.”

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European FIs are leading in coal divestments, but FIs in Asia have also rapidly increased with 41 institutions placing formal exit policies. This is up from only 10 between 2013 and 2019. 

A total of 22 FIs in the emerging economies have also established coal divestment policies, including South Africa, Malaysia, China, Turkey, India, and the Philippines.