Citi promises to cut lending to Coal miners

Citi promises to cut lending to Coal miners

Citigroup has pledged to cut lending to coal mining companies, citing the “tremendous” challenge of tackling climate change.
 
Citi’s move follows a wider campaign for divestment and comes after US rival Bank of America said earlier this year it would cut its exposure to coal mining groups.
 
High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detailIn an update to Citi’s environmental and social policy framework on Monday, the bank said its credit exposure to coal miners had “declined materially since 2011” and that “we commit to continue this trend of reducing our global credit exposure to coal mining companies”.
 
The bank previously had a policy of reducing exposure to companies that engage in mountaintop removal strip-mining, but the new policy extends that to all coal mining, including by “coal-focused subsidiaries of diversified mining companies”.
 
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Any new financing for coal miners, or extension of existing financing, will now be subject to “escalation and senior approval”, the policy says, with the human rights record of companies and their “commitment to reclamation/restoration” among the factors taken into consideration.
 
“This new policy reflects our declining exposure and our continued commitment to managing environmental and social risks and opportunities associated with client transactions,” Citi said.
 
Citi’s move reflects a wider campaign for divestment from fossil fuels and comes ahead of a meeting of almost 200 countries in December to broker a UN climate change accord.
 
Last month, Bank of England governor Mark Carney sparked controversy with a speech that warned investors faced “potentially huge” losses from action to tackle climate change. He said the “vast majority” of current energy reserves would be “unburnable” if the world was to keep global temperature rises below 2 per cent.
 
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Among all the primary fossil fuels — coal, oil and gas — coal contributes the most to climate change, accounting for a 43 per cent of energy-related carbon dioxide emissions despite providing 30 per cent of total energy supply, according to a Citi research note from August.
 
In May, Axa, one of the world’s largest insurers, said it would sell €500m of coal assets by the end of the year, while BofA said the same month it would reduce its exposure to coal mining companies. Aviva warned coal companies it would sell its holdings if they did not act on climate change.
 
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Investors controlling about $2.6tn in total assets have now committed to cut back or sell holdings in coal companies, according to research from Arabella Advisors.
 
Lindsey Allen, executive director of campaign group Rainforest Action Network, said the move by Citi showed “major momentum away from financing coal by the banking sector”.
 
“But reducing credit exposure is only a partial step forward. We urge Citigroup and Wall Street laggards such as Morgan Stanley to cut all financing ties to both coal mining and coal-fired power,” she added.

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