Private Finance

Financial institutions have a key role to play in accelerating a 1.5°C aligned coal phase-out. To phase out coal by 2030 in the OECD and EU, and by 2040 everywhere else, we need to end financing for new coal power plants and boost investments in early retirement of existing coal power plants. With renewable energy now far cheaper than coal almost everywhere, the case for this shift is even stronger.

The PPCA Finance Principles 

To date, 30 financial institutions, including insurance companies, banks and asset owners and managers have joined the PPCA and are taking ambitious steps to advance the coal-to-clean transition. Membership of the PPCA offers firms an opportunity to showcase their leadership in climate action and increases their influence at the global scale.

The PPCA first launched its Finance Principles in 2019 to support private financial institutions seeking to join the PPCA by translating the PPCA Declaration into terms compatible with their operations.

In 2024, we have launched a refreshed set of Finance Principles that provide a contemporary, state-of-the-art framework for financial institutions to consider when taking action on the coal-to-clean transition and becoming members of the PPCA.

As the PPCA is a voluntary alliance, each institution will implement the Finance Principles independently and within their own legal and regulatory contexts.

The revised PPCA Finance Principles emphasise the need for a robust coal policy. Since the PPCA first published the principles in 2019, a wave of financial institutions have made net-zero commitments and hundreds have included coal phase-out in their policies. When done right, these policies have been proven to help accelerate coal phase-out and reduce carbon emissions.

This is why the revised PPCA Finance Principles place an emphasis on situating action within a robust thermal coal policy. Financial institutions independently develop, implement and regularly revise their respective policies. The Principles put forward a framework which institutions can use to decide which companies they invest in or provide financial services to in order to support their move towards coal phase-out.

The PPCA Finance Principles build confidence in investments in early retirement of coal power plants. The Principles emphasise the need for action on ending support for new coal power within financial institutions’ coal policies. But while this is vital, we also need to significantly increase investments into closing existing assets in a way that is just for workers and communities.

Many private finance institutions already invest in closing existing coal power plants, but many are still wary to engage in such efforts, concerned about rises in financed emissions on the books. It is important to increase firms’ confidence in investing in managed phase-out and tackle the risks by building recognition of this investment as a one of the most necessary and effective forms of transition finance and putting in place the right guardrails.

This is what the new Finance Principles do: by building a norm that finance should consider proactively investing in coal transitions and providing a toolkit for how to do it: via implementing a thermal coal policy, engagement with clear deadlines and ring-fenced transition support, as well as advocacy among peers. For the full text of the Finance Principles please follow the link below

For the full text of the Finance Principles please follow the link below.

PPCA Finance Expert Group 

To support implementation of the Principles, the PPCA works through its member-led Finance Expert Group to address current challenges related to energy policy contexts, information and index provision, passive funds with exposure to unabated coal, investment mandate evolution, as well as fiduciary duty and legal/regulatory obligations.

The Coal Transition Commission

The Powering Past Coal Alliance hosts the secretariat of the Coal Transition Commission, which aims to develop policy recommendations for governments on how to build an enabling environment to increase public and private finance for coal transitions globally. The Commission is co-chaired by the French and Indonesian governments and constitutes a key pillar of the Coal Transition Accelerator — an initiative launched by the French government at the UN Climate Summit COP28 in December 2023 in partnership with global leaders, international organizations, and countries.

For the first report of the Coal Transition Commission please follow the link below.