Japan-based Sumitomo Mitsui Financial Group Inc (SMFG) has decided not to provide support to the newly-planned coal-fired power projects. The policy change will come into effect from May 1, 2020.
In its statement, the company said that ever since the adoption of the Paris Agreement, efforts to address climate change have been accelerated, and there is a global movement towards decarbonization, including the Japanese government calling for an 80% reduction in greenhouse gas emissions by 2050.
Recently, Japan’s Mizuho Financial Group also announced that the bank would not finance new coal power projects.
In March 2020, Mercom reported that U.S-based JP Morgan Chase announced that it had committed $50 billion (~₹3.59 trillion) towards green initiatives as part of a larger $200 billion (~₹14.37 trillion) commitment towards the United Nations Sustainable Development Goals (SDGs). Also, the bank said that it would not provide certain services to companies that make the majority of their revenue from coal extraction. It hopes to phase out any remaining credit exposure to such companies by 2024. The bank has also decided not to provide project financing for coal-fired power projects unless they use carbon capture and sequestration technology.
Previously, the European Investment Bank (EIB) announced that it would end financing fossil fuel-based projects by the end of 2021. The global lender now wants to focus its financing for projects that will accelerate clean energy innovation and energy efficiency. The bank said it has plans to support €1 trillion (~$1.107 trillion) of investments for climate action and environmentally sustainable projects from 2021 to 2030 and align all its financing activities with the goals of the Paris Agreement from the end of 2020.
British multinational banking and financial services company Standard Chartered has also pulled the plug on any upcoming coal-fired power plants across the globe.
Earlier, in a decision taken at its annual general meeting, the United Overseas Bank (UOB), Southeast Asia’s third-largest finance group announced that it would stop funding coal-powered projects. Before UOB decided to quit funding coal projects, two other big banks from Singapore, OCBC and DBS had taken the same decision in support of sustainable development without fossil-based fuels.
Then, HSBC, another well-known banking company, withdrew from the coal-fired power sector. It should be noted that HSBC, which is Europe’s largest bank, had significantly restricted its support for coal-fired stations back in 2011 itself. It also had stopped financing them in 78 developed countries. In a press statement on its website, HSBC stated that it has decided not to extend any financial support to coal-fired power in all countries around the world apart from Bangladesh, Indonesia, and Vietnam.
Another big bank that has walked away from coal in the recent past is Deutsche Bank. In a press release issued on its website on January 31, 2017, the bank revised its approach to coal financing and amended its guidelines to coal power and mining. The release confirmed that the bank will not grant any financing to new coal-based power plant construction and will gradually decrease its exposure to the thermal coal mining sector.
Coal, one of the most significant contributors to climate change, is on its way to becoming uninsurable. Several banks across the world are stepping back from financing coal-powered projects. Some of these banks include United Overseas Bank (UOB), the European Investment Bank (EIB), The Hongkong and Shanghai Banking Corporation Limited HSBC, and DBS Bank Ltd, to name a few.
The Unfriend Coal campaign shows how the insurance companies are exiting the coal sector because of the growing risk of unmanageable climate breakdown.
The organizations engaged in the campaign include Greenpeace, Urgewald (Germany), Rainforest Action Network (U.S.), the Japan Center for a Sustainable Environment and Society, Client Earth (U.K.), Market Forces (Australia), and the Sunrise Project (Australia), among others.
Anjana is a news editor at Mercom India. Before joining Mercom, she held roles of senior editor, district correspondent, and sub-editor for The Times of India, Biospectrum and The Sunday Guardian. Before that, she worked at the Deccan Herald and the Asianlite as chief sub-editor and news editor. She has also contributed to The Quint, Hindustan Times, The New Indian Express, Reader’s Digest (UK edition), IndiaSe (Singapore-based magazine) and Asiaville. Anjana holds a Master’s degree in Geography from North Bengal University, and a diploma in mass communication and journalism from Guru Ghasidas University, Bhopal.