Coal is the most damaging fossil fuel. So a sustainable bank would want to make sure it’s not funding coal extraction right? Well, US bank Citi is a massive funder of coal companies. And not just any old coal companies – the ones that are still expanding their coal digging. It’s a huge threat to the climate.
Every week there seems to be fresh evidence of just how much Citi and other banks are helping fossil fuel companies to grow their business. And this week is no exception.
Global Energy Monitor set out to investigate why coal projects – like coal-fired power stations – are growing (mostly in Asia), when all the banks have supposedly cut off financing for them all together.
They found that banks haven’t actually cut off financing for all coal at all. Instead of lending money earmarked for building specific projects like power stations that run on coal, banks just hand large sums of money to the companies building and operating them. So they’re technically not giving money to “coal projects”, they’re handing it to the companies that own the projects.
Banks essentially just hand big credit cards to coal companies and pretend like they don’t know what they’re going to do with the money. But we all know what they’re doing with the money.
And which bank comes out as the biggest culprit for these sorts of deals? Hmmm maybe the next subheading will tell us:
Citi is the top funder of coal developers:
It’s our favourite bank – Citi. The same bank that said in August that its coal policies are “in sync with climate science”. The same bank that is supposedly all about transitioning to a ‘net-zero’ economy by 2050. The same bank that is supposedly a leader among US banks on climate.
Global Energy Monitor looked specifically at which of Citi’s clients are still building *new coal* developments despite having to resign coal to the bin in order to stay within safe climate levels. They found that Citi had lent nearly $16 billion to these clients between 2019 and 2021.
Richard Brooks, climate finance director at Stand.earth, says:
“In 2022 it requires willful ignorance, if not outright malice, to pour billions in financing into the dirtiest fossil fuel. Yet this data shows that Citi is all in on developing completely new coal projects to lock in carbon pollution for decades. Citi is the only member of the top 20 funders of coal that is not a Chinese or Japanese bank. By providing nearly $16 billion to new coal developers between 2019 and 2021, Citi surpasses the next US bank by over 50 per cent. These numbers are outrageous for a bank committed to ‘net-zero’ and with an existing coal policy. Citi must make a hard turn closing all loopholes in their existing coal policy and stop more money going into coal expansion otherwise any remaining illusion that Citi is a leader on climate change should be abandoned.”
So what do we need to happen?
We need Citi and all US banks to update their current policies to exclude any company from its loanbook that is still building new coal. It’s simple. And it’s doable.
What is a bond?
Another interesting finding from the report is that these nasty coal companies are accessing funding via a (slightly) secretive backdoor. Instead of relying on general loans, they are issuing bonds. It’s just another way of getting them money. Global Energy Monitor found that on average 82% of the money for coal companies comes from bonds, compared to loans.
If you don’t know what the bond market is and why it’s crucial to tackling the climate crisis, that’s understandable!
Take 2 minutes and watch this from @toxic_bonds to start: pic.twitter.com/WcyKDM5v5y
— Ben Cushing (@bmcushing) October 6, 2022
And Citi plays a major role in the bond market. A bond is a way for companies to raise cash. Banks act as a gateway to connect the company with big investors and Citi is more than happy to ignore its climate commitments and oblige, because they can earn big fees on these deals.
Nick Haines, a campaign manager with SumOfUs working on the Toxic Bonds campaign, says: “Citi is performing sleight of hand – distracting investors and regulators with a half-finished coal policy, while behind its back facilitating a phenomenal amount of coal financing via bond markets without scrutiny. Does Citi think it can magically achieve its climate targets and ignore underwriting?”
Citi are greenwashing. They are not green or sustainable. They are cutting the brakes while the world is hurtling off a cliff. Citi MUST stop funding coal NOW.