Financial institutions leading the coal-to-clean energy transition

The Powering Past Coal Alliance celebrates reaching over 100 members

Investors increasingly recognise the business case for moving away from coal
Investors increasingly recognise the business case for moving away from coal

Six leading financial institutions joined the Powering Past Coal Alliance (PPCA) today at the 2020 Investor Summit on Climate Risk, further demonstrating the shift in finance away from coal and towards clean energy. The Alliance celebrates its 100th member today, a sign of the swift progress that has been made since its inception in late 2017.

The new members of the Alliance announced today are:

  1. Aberdeen Standard Investments (one of the world's largest investment companies, based in the UK)
  2. Church of England Pensions Board (providing retirement housing and pensions, for those who have served or worked for the Church of England)
  3. Desjardins Group (Canada’s largest cooperative financial group)
  4. Legal & General (a top 20-global asset manager and a leader in in the UK and US in managing retirement risk for pension schemes)
  5. Robeco (an international asset management company, based in the Netherlands)
  6. Swiss Re (one of the world’s leading providers of reinsurance, insurance and other forms of insurance-based risk transfer)

By signing onto the PPCA Finance Principles these institutions join ten existing PPCA finance sector members committed to ending finance for coal-fired power. The PPCA Finance Principles represent a comprehensive set of commitments to meet the aims of the Paris Agreement. The signatories, including banks, investors and insurers with assets all around the world, pledge to encourage others in the financial and utilities sectors to act on coal power phase-out. The PPCA aims to double the number of major financial institutions among its members by next year’s COP26 in Glasgow, UK.

Through a PPCA Finance Taskforce launched today, finance and government members and partners of the PPCA will work jointly to cease new investments in coal-fired power, phase out existing coal capacity and boost investments in clean energy. Taskforce members will engage in joint advocacy among policy makers and businesses, promote the shift of finance from coal to clean energy in the public debate, and ensure financial markets and policy makers are informed about phase-out plans and coal financing flows. This will be done in partnership with existing initiatives such as Climate Action 100+.

More and more financial institutions recognise the business case for moving away from coal. With renewable energy increasingly more economical than coal, continued investments in coal power pose the risk to investors of being left with cumbersome, costly and polluting assets on the books. Despite this positive trend, a significant amount of investment, from private and public sources, is still being made in unabated coal power plants around the world and the global coal fleet continues to grow.

This latest boost to the membership of the PPCA sends a signal that momentum for the clean energy transition is strong, even in the face of a global pandemic. As the world recovers from its impact, financial institutions (already emerging as strong advocates of green recovery measures) can play an important role in ensuring that stimulus funding accelerates the coal-to-clean transition. The PPCA will draw on the experience of its 104 members to support governments around the world in shaping and implementing green recovery packages.

The Honourable Jonathan Wilkinson, Canada’s Minister of Environment and Climate Change, said:

“It’s no coincidence that the members joining the Powering Past Coal Alliance today are from the financial sector. As the world begins its recovery from COVID-19, these companies realize not only the importance of phasing out emissions from coal power, but also see sizable economic opportunities and reduced financial risks in a global transition to low carbon energy.”

Kwasi Kwarteng, UK Minister for Business, Energy and Clean Growth, said:

“As holder of the COP26 Presidency, the UK is going further and faster on coal and our energy mix will be totally coal free by 2025. We are calling on our international partners to lay the foundations for a green, resilient global recovery from Covid-19 and phasing out coal will be vital to that. I am delighted that even more world-leading financial institutions are joining the PPCA, demonstrating their commitment to the environment and to channelling investment away from coal-fired power into sustainable, green energy.”

Guy Cormier, Desjardins President and CEO, said:

“Fighting and adapting to climate change is a priority for Desjardins Group. Our personal and business members and clients want a faster transition to clean energy. We are pleased to join the PCCA and supporting the shift away from coal.”

Martin Brookes, Director of Investment Strategy, Legal & General, said:

“L&G strongly supports the Paris Agreement and is committed to decarbonise the c£100bn assets on its balance sheet to align with no more than 1.5c of warming. The IPCC has shown that to deliver this, coal must be substantially removed from the global energy mix this decade. As part of our active engagement to deliver this objective we therefore support the work of PPCA in climate transition finance.”

Jacob Messina, Senior SI Strategist, Robeco, said:

“As an institutional investor, the mitigation of climate change is essential to safeguard our client’s wealth and wellbeing. As we strive to meet the Paris Agreement, the transition toward renewable energies is accelerating and coal’s economic viability continues to decline. We support PPCA’s multi-stakeholder approach to bring together governments, corporates and investors because collective action is needed to achieve our goal of advancing the retirement of unabated coal power.”

Dr. Thierry Corti, Head Sustainability Risk Management and Director, Group Risk Management, Swiss Re Management Ltd, said:

“Swiss Re is happy to join the PPCA to support the transition to a low carbon economy and manage carbon-related risks.”

Eva Cairns, Senior ESG Investment Analyst – Climate Change, Aberdeen Standard Investments, said:

“Aberdeen Standard Investment fully support the goals of the Paris Agreement and believe that unabated thermal coal for electricity production should be phased out urgently. We have joined the PPCA to demonstrate our strong support for thermal coal phase out no later than 2030 in OECD countries and 2050 in the rest of the world. We will reflect this in our active engagements which we consider to be a powerful tool for influencing an effective and just energy transition.”

Adam Matthews, Director of Ethics and Engagement for the Church of England Pensions Board, said:

“Joining the Powering Past Coal Alliance is a natural step for the Church of England Pensions Board and one which further supports our ambitions to help the companies we invest in to meet the Paris Agreement commitment, to keep the global temperature increase well below 2°C.”

Helen Wildsmith, Stewardship Director – Climate Change, CCLA and the initial co-ordinator of the PPCA finance taskforce, said:

“The new PPCA finance taskforce will ensure that coal phase-out is a priority for key finance sector initiatives on climate change. It will also work in partnership with governments and think tanks to accelerate the level of financial support for the transition to clean power globally. Collaboration between countries, sub-nationals, and the private sector is critical to achieving a timely and just transition to net zero emissions. By focusing on phasing out coal power, the PPCA is providing invaluable lessons for other industries that will soon need to decarbonise rapidly.”

Sriya Sundaresan, Senior Analyst, Co-head Power and Utilities, Carbon Tracker, said:

“Having influential financial institutions join as new members of the Alliance provides robust signalling that key players are seeking to focus on the energy transition and a path away from coal; this movement has only been amplified by Covid-19, and will hopefully result in other financial institutions and governments following suit.”

For more information, please contact:

Anna Drazkiewicz, Communications Manager, Powering Past Coal Alliance Secretariat, [email protected], 00 32 487 324 562

Notes:

The Powering Past Coal Alliance, co-led by Canada and the United Kingdom, is the world’s first and only coalition of national and sub-national governments and private sector organisations working to advance the transition away from unabated coal power generation.

Since its launch by the UK and Canadian governments at COP23 in 2017, the PPCA has been increasing its reach and influence. It currently has 104 members who play a pivotal role in driving global coal phase-out efforts. One third of the OECD’s total coal capacity has now been scheduled to close through retirement commitments and phase-out policies - PPCA members have helped make this happen.

The PPCA encourages all members to endorse the PPCA Declaration - including a commitment to phase out coal by 2030 in the OECD and EU, and by 2050 in the rest of the world. The UK and Canada, supported by CCLA Investment Management, have worked with leading financial institutions to establish the PPCA Finance Principles which translate the PPCA Declaration into meaningful commitments for the finance sector. They were launched last summer and compliment Climate Action 100+ and The Investor Agenda.

Financial sector members of the PPCA include: Aberdeen Standard Investments, Aviva Plc, Axa Investment Managers, Caisse des Dépôts Group, CCLA Investment Management, Central Finance Board of the Methodist Church and Epworth IM, Church Commissioners for England, Church of England Pensions Board, Desjardins Group, Hermes Investment Management, Legal & General, Robeco, Schroders, Storebrand, Swiss Re, Varma Mutual Pension Insurance Company.

Financial sector partners of the PPCA include: Ceres, Institutional Investors Group on Climate Change, Local Authority Pension Fund Forum and Principles for Responsible Investment.

Aberdeen Standard Investments is the asset management business of Standard Life Aberdeen plc, one of the world’s largest investment companies with a long-standing history. It manages £487 billion (€574 billion, $645 billion as at 31 December 2019) of assets worldwide for clients in 80 countries. It actively considers risks related to fossil fuels in its investment decision making process and offers fossil-fuel free solutions to clients. It is an active member of IIGCC and Climate Action 100+ and focuses on active engagement and public advocacy to encourage coal phase out in the timelines supported by the PPCA.

Church of England Pension Board provides retirement housing and pensions, set by the Church of England, for those who have served or worked for the Church. It assists over 40,000 people across almost 700 employers and manages funds in excess of £2.8 billion. The Pensions Board excludes companies from its investment portfolio if they generate over 10% of their revenue from thermal coal and oil sands. It also co-chairs the Transition Pathway Initiative, which assesses the world’s biggest polluters on their management of climate change-related risks and opportunities.

Desjardins Group is the leading cooperative financial group in Canada and the sixth largest cooperative financial group in the world, with assets of more than CA$326 billion. For nearly 30 years, Desjardins Group has been striving to integrate environmental perspectives into its operations and financial products. Since 2017 it has taken a firm stance in support of the Paris Agreement on climate change and is a leading proponent of a just energy transition in Canada.

Legal & General is a top 20 global asset manager and the UK’s largest provider of individual life assurance products, with over £1 trillion in assets. Legal & General Investment Management (LGIM), the investment management arm of Legal & General Group and one of the world’s largest asset managers, removed coal companies from its Future World funds, and committed to vote against chairs of companies who fail to confront the threats posed by climate change.

Robeco is a pure-play international asset manager with headquarters in Rotterdam, the Netherlands. Robeco SI Focus funds are divested from mining companies with more than 10% of revenues derived from thermal coal, and from power producers with more than 20% of thermal coal-related revenues. It has also set a carbon reduction target of at least 20% versus the benchmark for all of its SI Focus funds. In addition, Robeco engages with companies in an effort to accelerate the decommissioning of coal-based operations, both individually and collectively as part of the Climate Action 100+ initiative.

The Swiss Re Group is one of the world’s leading providers of reinsurance, insurance and other forms of insurance-based risk transfer, working to make the world more resilient. It anticipates and manages risk – from natural catastrophes to climate change, from ageing populations to cyber crime. Swiss Re is committed to net-zero emissions by 2050 on the asset and liability side, and by 2030 for its own operations.