A new report by the Sierra Club’s Fossil-Free Finance campaign reveals that major global banks are propping up deadly coal plants across the US - including those run by Duke Energy - by financing the parent companies that own them. This financing comes despite the fact that many banks have climate commitments that restrict them from providing project-level loans to coal plants. The analysis reveals a massive loophole in the banks’ climate commitments through their continued lending and underwriting for companies operating deadly coal-fired power plants in the United States.
The analysis follows the release of the Sierra Club’s Out of Control report, which revealed there are approximately 3,800 premature deaths annually from soot released by US coal plants with no firm retirement plans prior to the end of the decade. By financing the parent companies of these coal utilities, major global banks are channeling billions of dollars into the very companies responsible for keeping these deadly coal plants operational and poisoning nearby communities with toxic air pollution.
Column 1 content“Despite their high-profile climate pledges, major banks like Barclays and Citi are continuing to funnel billions of dollars into deadly coal plants. With their flimsy financing policies and half-finished net zero targets, these banks have left billions of dollars on the table for major polluters to continue to operate and even expand the coal plants killing thousands of people in the United States every year,” said Adele Shraiman, Senior Campaign Strategist, Fossil-Free Finance, Sierra Club. “Experts have repeatedly warned that fossil fuel expansion will make it impossible to meet our global climate goals, and coal power is the worst of the bunch. By continuing to pour money into coal, these banks are telling their shareholders, clients, and regulators they aren’t serious about meeting their own climate commitments.”
TOPLINES FROM THE REPORT
The report reveals that since 2016, major global banks have poured $166 billion into 10 of the most deadly publicly traded and federally owned coal utility parent companies in the US: Tennessee Valley Authority (TVA), PPL Corporation, Berkshire Hathaway Energy, Ameren Corporation, Vistra Corporation, FirstEnergy Corporation, Duke Energy Corporation, NRG Energy Inc, American Electric Power, and The Southern Company. These 10 coal utility parent companies operate coal plants in 16 states with no firm plans to close by 2030. Each year, the coal plants owned by these 10 companies cause an additional 1,719 premature deaths from air pollution exposure.
Six major banks — Barclays, JP Morgan Chase, Bank of America, Citi, Wells Fargo, and Mitsubishi UFJ (MUFG) — make up 50%, or $83.8 billion, of the total financing provided to these 10 coal utility parent companies since 2016. Other banks that round out the top 10 include Mizuho, Goldman Sachs, RBC, and Credit Suisse.
Barclays and the five US banks are all signatories of banking industry pledges to reach net zero by 2050 by reducing their greenhouse gas (GHG) emissions from their financing activities. When it comes to providing financing to the coal sector, most banks won’t directly offer funds specifically for coal plants (project-level financing). However, banks freely lend to the coal utility parent companies (corporate-level financing), which allows them to operate those coal plants. Of the top 6 banks in the report, only Barclays has a policy that prohibits corporate-level financing to some companies operating coal plants, either through general purpose loans or underwriting the sale of bonds or shares. However, even Barclays’ policy makes several exceptions, which still allow financing for companies developing coal power.
The Sierra Club is calling on banks to expand their climate commitments to include additional restrictions on corporate-level lending and underwriting services to utility companies prolonging the use of coal in the power sector.