A German NGO is tackling the fossil fuels problem at the source – with the “Global Coal Exit List”, an invaluable digital database that encourages influential investors to stop supporting the coal industry.
For climate activists, thinking about the fossil fuels industry can be disheartening. How can we build towards a sustainable future when so many colossal, billion-dollar companies are still investing in the production of dirty energy? Around the world, powerful purveyors of coal, oil and gas are still digging their heels in to protect their profits against the climate lobby.
That’s why Urgewald, a German environmental and human rights NGO, has developed The Global Coal Exit List (GCEL), to help institutions around the world divest from coal. The online database is the go-to resource for information about almost 1000 companies that make up the global coal supply chain.
Who are the big players in coal? How much coal does a company produce and sell? How much of their revenue comes not just from coal production, but from coal-related revenue streams, such as mining equipment and manufacturing? These are the kinds of complex questions that GCEL strives to answer. Through its specialised criteria, the list provides an accurate picture of different companies’ dependence on coal-related business, promotes transparency and helps investors avoid, or divest from, companies still profiting from coal. The GCEL is publicly available and not hidden behind any kind of paywall – meaning it can be reviewed and fact-checked by companies, as well as by civil society organisations, journalists and academics.
Each year, the team at Urgewald painstakingly collates information from companies around the world to ensure the GCEL is as comprehensive and up-to-date as possible. GCEL’s positive effects are already palpable. Among the over 400 financial institutions that are registered users of the list are leading European insurers and asset managers Allianz, who have 1800 billion euro of investment under their control, and Axa, with a portfolio of 700 billion euro. According to GCEL, as of November 2020, institutions with over 14 trillion USD assets under management were already using one or more of the three GCEL criteria to screen coal companies out of their portfolios.
Of course, it’s not merely good faith that is driving institutions to divest from coal. “It’s not financially reasonable to invest in coal anymore,” Tohid Khaleghi, researcher on the GCEL team, explains. “It’s becoming increasingly less profitable and risky. Renewable energy infrastructure is actually much more sustainable, also financially.”
With so many countries introducing targets to cut down on fossil fuels, many investors are now under pressure to screen coal out of their portfolios. Most of Western Europe and a significant portion of Central Europe plan to phase out coal by 2030, with countries such as Belgium, Austria and Sweden already “coal-free”. For investors, the reputational risk is becoming untenable, while the shift towards green energies makes the promising industries of wind, solar and hydropower more judicious choices for many. But, as always with green solutions, divestment isn’t cut and dried.
“How the divestment is happening is also very critical,” Khaleghi explains. Even when companies ostensibly move away from coal, they often end up selling the assets to private companies – who, unlike publicly traded ones, aren’t so easily traceable – or to countries that don’t yet have strong policy on divesting from fossil fuels. In these cases, the problem simply gets exported to somewhere with weaker regulations.
As well as that, of the 935 parent companies listed on GCEL, the Urgewald team found that less than 25 had coal exit plans in place – a shockingly low number. This is despite the fact that coal-fired electricity generation needs to decrease by 11 percent per year to keep the 1.5°C goal within reach and, according to Khaleghi, moving fully away from coal energy is entirely possible, if the will is there. “Thermal coal operations are on the way out anyway,” he says. “Coal has a bad reputation already as climate destructive. In Europe, coal-focused companies are deemed unbankable and US thermal coal mining companies are barely hanging on.”
Unfortunately, coal is not the only energy source with catastrophic effects on the environment: that’s why work on divestment from other fossil fuels is already in the pipeline at Urgewald. More information on the development of the GCEL, including the banks and investors still financing the fossil fuel industry, can be found in their Five Years Lost report.
