While a recent analysis of S&P Global TruCost reports that integrating TruCost’s Sustainable Development Goals (SDGs) dataset into a portfolio led to better performance than a non-SDG aligned portfolio, Urgewald and 30 NGOs partners, including Reclaim Finance, publish an update of the Global Coal Exit List (GCEL), the most comprehensive database of companies operating across the thermal coal value chain that challenges TruCost’s methodology.
The update comes as the APCR and the AMF have asked French financial institutions to publicly indicate the data sources they use to implement their policy on the coal sector.
In France, the main competitor of GCEL by Urgewald is Trucost, whose data is used by the French Banking Federation. Today, the NGO Reclaim Finance exposes the weaknesses of the American database and calls on all French financial institutions to use the GCEL.
« Our ability to get out of coal on time is based on this technical debate. »
GCEL comprises 935 parent companies as well as more than 1,800 subsidiaries and affiliates, whose activities range from coal mining, coal trading and transportation to coal-fired power generation and manufacturing equipment for the coal industry. Taken together, the companies listed in the GCEL account for 88% of global thermal coal production and nearly 85% of the global coal-fired power generation capacity.
« We are in a climate emergency, and a rapid exit from coal is more urgent than ever. Our database identifies 935 companies that the financial sector must blacklist if it is serious about achieving Paris Agreement goals.»Heffa Schücking, Director – Urgewald
The GCEL plays a major role in the development of coal policies for many major financial players, including AXA from 2017. More than 400 financial institutions are registered on coalexitas users of the database, but not all of them make it the backbone of their policy yet.
Like the World Bank Group’s IFC, French financial regulators, the AMF and the ACPR, have used the GCEL to assess the exposure of French financial institutions to coal. The French Insurance Federation and the French Financial Management Association have also recommended that their members use the GCEL.
Conversely, the French Banking Federation does not recommend a specific database for its members and used a list of 500 companies provided by Trucost to assess its members’ exposure to the coal sector.
The website of the Sustainable Finance Observatory indicates that the French Banking Federation has chosen Trucost because of the completeness of its list and its ability to provide banks for each of the companies in the list below, the percentage of the figure business of the company derived from the sale of thermal coal and / or electricity produced from coal.
According to the NGO Reclaim Finance, “not only does the Trucost-FBF list omit hundreds of companies operating in the coal sector, including some of the largest producers or operators of coal-fired power stations in the world or 216 developers of new power stations, but it also fails on many points raised by the CCAM and the AMF in their report.”
An analysis conducted by Reclaim Finance, on a comparison of data from Trucost and GCEL, shows that those provided by the American actor are very often “misleading”.
“This perfectly illustrates what the Minister of the Economy and Finance, Bruno Le Maire, said on Climate Finance Day when he called on French financial institutions to align their coal exit policies with best practices. Beyond the importance of using a solid set of several exclusion criteria, there is the question of the data used by banks, insurers and asset managers to define the coal sector and implement their policies. Using a very limited list of companies, based on unreliable data, would automatically lead us to fail the climatic litmus test: leave the coal behind.”Lucie Pinson, Founder & Executive Director – Reclaim Finance
In the same vein as the AMF and the ACPR, which warn against the risk of financial institutions “choosing the most favorable data source allowing to place a company below the thresholds defined opportunistically”
Reclaim Finance calls on French financial institutions to disclose the data they use to implement their coal exit policies and to adopt policies based on a set of several criteria – and not just on the share of coal-related revenue. This will be essential to avoid missing out on important coal companies but to cover the entire coal value chain. More specifically, Reclaim Finance calls on them to adopt and implement the criteria used by Urgewald to identify companies listed in the GCEL.
The Coal Policy Tool is available here
Article: Joana Foglia – Source : Reclaim Finance, TruCost