Below is Reclaim Finance’s response to Natwest’s new coal policy:
NatWest, a sponsor of the COP26 summit and a member of the Net-Zero Banking Alliance, has just announced new measures regarding its support to the coal sector. While its exclusion of companies with coal expansion plans is a welcome progress, NatWest has missed another opportunity to clarify what requirements are expected from other coal customers to remain in the bank’s portfolio. Reclaim Finance calls on Natwest to condition further support on the adoption of a Paris-aligned asset-based coal exit plan and to acknowledge the key finding of the IEA’s NZ report: namely, that net zero means ending the expansion of the fossil fuel industry, including oil and gas.
NatWest recommitted to a “full phase-out from coal by 2030”. While the bank is finally committing not to support companies with coal power or coal mining expansion plans, it’s unclear how the bank intends to achieve its 2030 target. Natwest says that it will phase out of coal for UK customers who have UK coal production, coal fired generation and coal related infrastructure by 1 October 2024. Nothing is said about its customers outside the UK.
According to the Global Coal Exit List, NatWest’s support to the coal industry was worth more than $2 billion in underwriting and loans from October 2018 to October 2020, of which $846 million was in support of Glencore. Glencore is the 9th biggest coal mining company worldwide, accountable for the annual production of around 120 million tons of coal and lacking a plan to phase out by 2030. It has also been subject to allegations of human rights violations, particularly in Colombia. Another example is RWE, a major European coal player with no plan to shut down its coal assets by 2030 and which is suing the State of Netherlands for planning a national coal phase-out.
NatWest recommitted to stop lending and underwriting to all companies with more than 15% of activities related to coal, and major oil and gas producers “unless they have a credible transition plan in line with the 2015 Paris Agreement by the end of 2021”. Yet, while we are less than two months away from the end of 2021, the bank still fails to provide clear requirements or draw up red lines for these plans. On the contrary, despite saying that Natwest will engage its “customers during Q4 2021 to discuss outcomes of our assessments”, as well as “how [it] can support their transition away from fossil fuels to low carbon technologies as appropriate”, the bank says it is still in “the process of assessing the CTPs of these in scope customers and expect to complete this by the end of 2021″.
Lucie Pinson, Executive Director at Reclaim Finance, said: “The success of NatWest’s new fossil fuel policy will depend on the strength of its requirements for credible transition plans. If the bank is serious in its commitments, it must immediately stop providing financial services to companies without plans to phase out their activities in coal mining and power generation by 2030, such as RWE and Glencore. For now, the credibility of the policy hangs in the balance: a big step towards climate action, or a loophole-strewn license to drill.”
NatWest has committed to aligning its lending and investment portfolios with net-zero emissions by 2050. According to the IEA’s NZ report, unabated fossil fuel power plants should be closed by 2035 in advanced economies and by 2040 in the rest of the world. Natwest’s credible transition plans will only be credible if the bank requires utilities to move from coal to a sustainable and renewable-based energy system, skipping gas as an alternative to coal.
Likewise, the credibility of NatWest’s CTPs is contingent on ending the provision of financial services to oil and gas majors that are increasing production and developing new fossil fuel projects as alignment with the Paris Agreement goals leaves no room for oil and gas expansion. According to the latest Banking on Climate Chaos report, NatWest is still in the top 50 most polluting banks in the world, channeling more than $13 billion in fossil fuel financing over the past five years (2016-2020) and there is no obvious downward trend.