The Coal Policy Tool, developed by Reclaim Finance and endorsed by over 25 organisations, counts, compares and rates the coal policies adopted by banks, (re)insurers, asset owners and asset managers. It enables clients, media, financial institutions and other stakeholders to easily navigate the coal policy jungle. It aims at ensuring high quality coal policies that effectively contribute to keep global warming below 1.5°C. The Coal Policy Tool is updated on a continuous basis.
The main goal of the tool is to encourage high-quality coal policies. As banks, insurers and investors consider new policies or seek to revise older policies, understanding the details of these policies is critical to ensure they deliver on the Paris Agreement goal to limit global warming to a maximum of 1.5°C above pre-industrial levels.
In a simple visual way, the Coal Policy Tool provides an answer to the key question: Will this policy help us stay within the 1.5°C limit? Thanks to a detailed scoring and analysis, it shows what each policy is missing and which next steps each financial institution should focus on.
The number of investors, insurers and banks with policy guidelines restricting their support to the coal sector is growing rapidly. However, not all policies are created equal and the details of adopted policies vary dramatically. Many policies are still merely window-dressing and public relation stunts, with little to no concrete impact on the thermal coal industry.
- Policies rarely cover the entire value chain, from mining to power through infrastructure.
- Policies rarely stop all financial services, including corporate and project financing, bondholding, bond underwriting, and passive fund management.
- Policies rarely combine exclusion and shareholder engagement to not only prevent the expansion of the coal sector, but to also support its phase-out.
Financial institutions are extremely creative when it comes to integrating subtle legalese that would undermine or altogether negate the claimed aims of their coal policy. One must be able to read and understand the fine print of it to truly appreciate what policies (fail to) achieve. Many, if not most financial institutions have poor knowledge of the coal industry and its actors, as well as how the sector should evolve to align itself with climate targets. Not surprisingly, policies are not sufficiently sophisticated to tackle the intricacies of coal-related issues.
Reclaim Finance also developed the Oil & Gas Policy Tracker, a dedicated tool to assess and support the adoption of robust oil and gas exit policies by financial institutions. High-quality coal exit policies are just the beginning towards a fossil-free future.
