Major French banks have continued to support problematic coal sector companies, despite the commitments made four years ago, new analysis by Reclaim Finance reveals (1), which identifies several financial deals with companies developing new coal mines or power plants. The analysis finds that loopholes in the policies of the four banks, BNP Paribas, Société Générale, Crédit Agricole and Banque Populaire Caisse d’Epargne (BPCE)/Natixis, are to blame. Reclaim Finance accuses the banks of misleading behaviour, given they have repeatedly declared their “exit from coal”. Reclaim Finance is calling on the French financial markets watchdog (the Autorité des marchés financiers) to put a stop to this greenwashing and to require banks to correct their practices, or face sanctions.

Financing to the coal sector from these banks has declined since the adoption of their policies in 2020 (2), but a number of problematic transactions still took place between 2021 and 2023. Reclaim Finance’s analysis reveals that BNP Paribas, Société Générale, Crédit Agricole and Banque Populaire Caisse d’Epargne/Natixis continued to finance companies that are still developing new coal mines or power plants. These include South Korea’s Posco and Japan’s Mitsubishi. Financing has also been identified for companies that have not set a public date for exiting the coal sector, or that have set dates that are not aligned with limiting global warming to 1.5°C (3).

In total, 20 problematic groups received support from BNP Paribas, including 8 companies developing new coal mines or power plants, 11 groups received support from Crédit Agricole, 9 from Société Générale and 3 from BPCE/Natixis.

The need to put an end to highly polluting coal expansion is well known. Yet French banks have continued to finance coal expansion, despite pledging to end their support for the sector’s development. These findings show that banks’ commitments must be checked, and they should face sanctions for misleading practice.

Yann Louvel, sector policy analyst at Reclaim Finance

While these transactions with problematic coal companies are not technically “breaches” of their coal policies, they are nonetheless contrary to the stated objectives of these policies: to stop financing the expansion of the sector and to support an exit by 2030/2040.

The briefing identifies four major flaws in their policies, which can be found in one or more banks, and which can explain how these transactions were allowed:

• The subsidiary operating or holding the coal assets is excluded from financing, but not the group to which it belongs;
• Companies that own less than 50% of a coal project are excluded from the banks’ policies;
• Industrial projects – even those including captive coal-fired power plants – may be financed, or the industrial company developing the coal-fired power plant can be financed;
• Companies may be financed on a case-by-case basis on the basis of confidential information received by the banks on their date of exit from the coal sector.

Reclaim Finance’s analysis also highlights the banks’ lack of transparency regarding their coal policies. This problem has also been highlighted by French regulators (4). Reclaim Finance questioned the banks on this lack of transparency on several occasions but received no response, or only a partial response, from most banks on how their policies were applied.

If the banks are to be believed, they have stopped supporting the coal sector – but this is not reflected in the detail of their policies. These problematic transactions run counter to the banks’ stated objectives. This contradiction constitutes greenwashing, as banks’ communications on coal can mislead investors and stakeholders. It’s now up to the French watchdog to put an end to these inconsistencies and sanction the banks if the flaws in their policies persist.

Yann Louvel, sector policy analyst at Reclaim Finance

Reclaim Finance is calling on the French financial market authority to require banks to comply with the spirit of their policies, and to use all the tools at its disposal to penalize non-compliance.

Read the report

Notes:

1. Reclaim Finance, Behind the smokescreen – The loopholes in French banks’ coal policies, October 2024. 
2. Financing by major French banks to Global Coal Exit List companies fell by 59% between 2019 and 2023. 
3. For example, Japanese group Marubeni plans to exit the coal sector worldwide in 2050, 10 years too late for climate science.  The US group FirstEnergy has just cancelled its 2030 decarbonization target and pushed back the closure of its power plants to 2035 and 2040, or even 2050, whereas scientists say coal power must be phased out by 2030 in the OECD. 
4. ACPR and AMF, Quatrième rapport commun ACPR/AMF – Suivi et évaluation des engagements climatiques des acteurs de la Place, June 2024, (in French), and in previous versions.

This press release was originally published on Reclaim Finance's website here.