Commercial banks lent over US$1.5tn to companies in the global coal industry between 2019 and 2021, according to new research, despite a flurry of commitments to ease away from the sector and aim for net-zero emissions.

Yesterday, a coalition of NGOs published an analysis of data compiled by Dutch sustainability research firm Profunda, which suggests that 376 commercial lenders provided US$363bn to the coal industry between January 2021 and November last year, while 484 institutions provided US$1.2tn in underwriting.

The research draws on figures from deal databases such as those maintained by Refinitiv and Bloomberg, and includes financing for 1,032 companies on a “global coal exit” list maintained by the NGOs which includes miners, traders, coal transporters, power plant operators and equipment manufacturers.

Many banks have pledged to exit the coal sector, a trend that gathered pace in the run-up to last year’s Cop26 summit in Glasgow. A database maintained by the Institute for Energy Economics and Financial Analysis shows that between 2019 and mid-2021, some 250 financial institutions and insurance providers had pledged some form of coal exclusion, or to exit the sector entirely.

Many global banking giants also signed up last year to the Net Zero Banking Alliance, which requires signatories to abide by lending and investment guidelines aligned with the aim of keeping global warming under 1.5 degrees Celsius and achieving net-zero emissions by 2050.

However, the research, led by German campaign group Urgewald, noted that 10 of the 12 top lenders to the sector are members of the alliance. The dozen top financiers are responsible for 48% of loans extended to coal companies during the period.

Three Japanese banks – Mizuho, MUFG and SMBC – top the rankings, lending between US$20bn and US$33.6bn each. Barclays, the only UK-headquartered bank in the top 12, lent US$16.1bn during the period, while Citi extended US$14.9bn, the analysis says. All are members of the Net Zero Banking Alliance.

“At the time when it counts most – today – most of these banks are still channelling billions of dollars to the coal industry,” says Eri Watanabe from the Japan branch of, a climate change campaign group. “It is not enough to make net-zero promises for the distant future and only inch towards them reluctantly.”

In response to the report, a spokesperson for MUFG tells GTR the lender has a policy of net-zero emissions in its portfolio by 2050 and is “committed to operating in a manner that is both socially responsible and in accordance with the long-term developmental requirements of the markets that it operates in”. Since June 2021 the bank only provides finance to coal-fired power projects with emissions-abatement technology, the spokesperson says.

A spokesperson for Barclays says: “In 2020, in recognition of the fact that Barclays should go further in this area, we committed to not provide general corporate financing that is specified as being for new or expanded coal mining or coal-fired power plant development, and have introduced tightened restrictions on financing of thermal coal mining and power clients.”

The bank also does not provide project finance for new or expanding existing coal-fired power stations or thermal coal mines and is making cuts to emissions from its energy portfolio, the spokesperson says.

SMBC declined to comment but noted that it is also committed to reducing its portfolio emissions to net zero by 2050. Citi also declined to comment. Mizuho did not respond to requests for comment.

The NGOs’ research does not distinguish between thermal and coking coal. Used in steelmaking, green alternatives to coking coal have only recently emerged.

Green finance provided to a company’s non-coal operations was excluded from the data analysis but all financing to diversified companies is included, meaning the funds may be used for purposes other than coal-related operations.

In cases where the individual contributions of each bank to a syndicated facility are not known, the researchers used the bank’s fee to calculate its share of the lending, or the facility’s book ratio.

The report also found that just 12 financial institutions – all but one based in China – had provided 39%, or US$460bn, of the total underwriting for the coal companies during the period.

“Underwriting now accounts for the lion’s share of capital that banks mobilise for their coal clients. It’s therefore crucial that the Net Zero Banking Alliance also begins applying its emission reduction targets to underwriting immediately,” says Yann Louvel of NGO Reclaim Finance, which campaigns for sustainable finance.

Campaigners are increasingly taking aim at private and public financial institutions for supporting not just coal, but also oil and gas. Activist groups such as Market Forces and ShareAction have lobbied shareholders of major financial institutions to support tougher restrictions on fossil fuel financing.


Coal price boom

Following a brief dip in coal demand during the early days of the coronavirus pandemic, coal-fired power generation grew strongly in 2021, hitting an all-time high, according to the International Energy Agency (IEA). The agency also predicts that coal production will hit a record high this year as production ramps up in China and India.

In addition to the two economic powerhouses, many large Asian countries such as Vietnam, Indonesia and the Philippines still rely heavily on coal for a significant share of electricity generation.

Prices have also soared, helped by a supply shortfall in China during 2021. Glencore, a major producer, reported bumper earnings this week as the market pays top dollar for its thermal coal.

The conglomerate, which plans to run down its coal production over the next three decades, charted a 125% price jump in Newcastle coal between 2020 and 2021, according to its preliminary annual results published on February 15. Glencore attracted US$31bn in loans and underwriting from commercial providers during the period, according to the NGO data.

An IEA report published in December notes that coal’s trajectory will depend on how quickly China and India pursue a transition to renewable energy.

“The pledges to reach net-zero emissions made by many countries, including China and India, should have very strong implications for coal – but these are not yet visible in our near-term forecast, reflecting the major gap between ambitions and action,” the IEA notes.

In its landmark net-zero pathway published last year, the IEA said that reaching net-zero global emissions by 2050 – deemed by scientists to be a minimum measure for averting the worst impacts of global warming – requires an immediate end to construction of new or extended coal mines.

It says in that scenario, the total value of the global coal market will be overtaken by that of critical minerals required for clean energy technologies by 2030, and be negligible in comparison by 2050.

Some diversified natural resources companies are already embracing the forecast trend. Former coal major BHP, which according to the Profunda data had US$5.5bn of bank loans during the period, has announced its intentions to exit the sector entirely and already shed some coal assets to miners, including Glencore. Meanwhile, it says it plans to invest heavily in critical minerals.