Climate change: China trails global financial firms in committing to end investments in coal projects, study shows

Of the 200 or so ‘globally significant’ institutions with formal policies restricting investment in coal-related projects, only three are from China, according to the IEEFA

Institutions have identified coal as a risky investment and see climate risk as a financial risk, the Ohio-based think tank’s Christina Ng said

Reading Time:3 minutes

Conveyor belts transport coal into piles at Lianyungang port in China’s eastern Jiangsu province. Photo: VCG via Getty Images

Published: 8:15am, 4 May 2023

The number of financial institutions globally that have committed to coal divestments has doubled in the past three years, but it remains negligible in China, according to a new study.

While more than 200 “globally significant” companies now have formal policies restricting investment in coal mining or coal-fired power projects, just three financial institutions from China have established a formal coal policy, the Institute for Energy Economics and Financial Analysis (IEEFA) said in its “200 and Counting: Global Financial Institutions are Exiting Coal” report on Thursday.

It took almost six years until 2019 for the first 100 institutions, including banks, insurance companies, asset managers, pension funds, export credit agencies and multilateral development banks, to adopt coal exclusion policies, but since then the number has doubled in just over three years, the Ohio-based independent think tank said.

“Institutions are getting tougher on what they will finance, and they have identified coal as a risky investment,” Christina Ng, the IEEFA’s debt markets leader for Asia-Pacific, said in a statement. “They see climate risk as a financial risk.”

A man walks past a coal-fired power plant in Shanghai, China. Photo: Reuters

Companies across the world are aligning their lending to goals to reduce carbon emissions and reach net zero to contain global warming and avoid catastrophic consequences of climate change.