Coal Havens – Asia’s Biggest Banks Still Open For Coal Business After COP28

The largest banks in India and Indonesia – global hotspots of the coal industry’s growth – have no coal exclusion policy.

A new report released by BankTrack shows that major Asian banks – including Mizuho, SMBC and MUFG in Japan, Bank Mandiri, Rakyat and Negara in Indonesia, and State Bank of India, Axis Bank and Bank of Baroda in India – are open for business in coal, the dirtiest fossil fuel. 

In spite of Asia being the “growth engine” of the global coal industry and the world agreeing to transition away from fossil fuels at COP28 in December 2023, most of Asia’s major banks have either very weak or non-existent exclusions of coal from their investment portfolios, leaving the door open to continued investment in climate destruction.

Half of the 30 Asian banks analysed still have no restrictions on coal finance, and the rest have only weak restrictions. Other findings revealed:

1) “Captive” coal power in Indonesia is expanding, and therefore could attract growing finance and undermine climate mitigation

2) Banks’ money is being redirected away from specific projects and towards the companies behind them, with corporate lending and underwriting replacing project finance.

3) Domestic and regional financiers, as well as private equity, are playing a growing role in coal.

Coal Havens surveys the coal policies (or lack thereof) of 30 major banks across India, Indonesia, Japan, Malaysia, Philippines, Singapore, South Korea, Taiwan and Thailand; banks that have over US$8 trillion in assets under management collectively.

Their coal exclusion policies were evaluated by BankTrack using the criteria from Reclaim Finance’s Coal Policy Tracker, which cover banks’ finance policies on coal projects, companies’ expansion plans, whether the bank applies thresholds on coal mining and coal power companies, its coal finance phase-out strategy and the exclusion of metallurgical coal.

Will O’Sullivan, climate campaigner at BankTrack, said: “The shrinking corners of the coal industry are still having money pumped into them by some of the biggest banks in Asia. The Japanese megabanks Mizuho, MUFG and SMBC, Indonesia’s “Big Four”, Banks Mandiri, Negara, Rakyat and Central Asia, and Singapore’s “Big Three”, DBS, OCBC and UOB, among others, have totally inadequate coal policies while they actively finance climate destruction – long after they should have exited coal. All these banks should urgently and permanently adopt robust coal exclusion policies, and transition rapidly to renewable energy investment.”

Anirban Bhattacharya, team lead on national finance at Centre for Financial Accountability, said: “Our own research finds that national financial institutions account for 93% of the sanctioned loans to coal-based power plants in India. And the government-owned banks, including State Bank of India, still are the major lenders to privately owned coal plants. About 25-35% of Indian Bank loans are exposed to carbon-intensive sectors including coal as per Moody. Even a recent survey of the Reserve Bank of India shows that a majority of the banks have not related their climate-related financial disclosures with any internationally accepted framework. While it is good that RBI is surveying the modalities of green financing, it must take on much more of a regulatory than an advisory role if we are to be true to our climate responsibilities.”

While the report focuses on Asian banks’ policy positions, it also highlights that major US and European financiers are still investing in coal: Barclays, Citi, Standard Chartered, Deutsche Bank and others are exploiting the relatively opaque and unscrutinised finance routes of corporate lending and underwriting, to finance the mining and burning of coal across the region.

Sagar Asapur, sustainable finance analyst at Climate Risk Horizons, said: “India is poised to become the clean energy leader of tomorrow, harnessing solar, wind, and energy storage at some of the world’s lowest rates. To align with this transition, banks should focus on supporting renewables while swiftly enhancing energy efficiency and phasing out their investments in new coal power projects. New coal is no longer needed from an electricity demand perspective, nor competitive financially and is of course incompatible with a 1.5°C world.”