Exclusive: Credit Suisse investors call for tougher coal funding policy

© Reuters. FILE PHOTO: A leaf rests on a pile of coal in Youngstown, Ohio

By Simon Jessop and Brenna Hughes Neghaiwi

LONDON / ZURICH (Reuters) – Swiss credit (SIX 🙂 Investors under $ 2.5 trillion have called on the bank to take a stronger stance on coal financing, amid concerns that its current policies are too lax, a letter seen by Reuters showed. .

The role of lenders in financing the activities of the companies responsible for the majority of greenhouse gas emissions is increasingly at the center of the concerns of investors and decision-makers, keen to accelerate climate action.

Thermal coal, used to generate electricity, has been the focus of concern as it is one of the highest emitting fossil fuels and investors are eager to phase it out. A similar group of investors have already secured a commitment from HSBC to do so and are urging Barclays (LON 🙂 to follow suit.

While backing Credit Suisse’s commitment to align its funding with the Paris climate agreement and set science-based emission reduction targets within two years, investors said they also want action operational “firm” to curb coal lending.

Since shareholders cannot ask questions of the board of directors at the company’s virtual annual general meeting on Friday – which will be overshadowed by the bank’s losses to investment fund Archegos – investors, including one of the biggest in Europe, Amundi, wrote to the board on Thursday. their requests.

Coordinated by the responsible investment NGO ShareAction, the group also includes the Ethos Foundation, which advises 225 Swiss pension funds and public utility foundations and whose members hold between 3% and 5% of the company’s capital, as well as as BMO Global Asset Management, Actiam and Folksam.

In the letter, the group said the expansion of the coal industry had “long been recognized as inconsistent with the goals of the Paris Agreement,” which requires countries to achieve net zero carbon emissions from by 2050.

Citing a Rainforest Action Network study showing that Credit Suisse is the third largest funder of coal energy in Europe and Europe’s largest funder of coal mining between 2016 and 2020, the letter indicates that the bank is behind its peers on the issue.

Last July, the bank announced that it would stop financing or subscribing to companies with a coal share of revenues exceeding 25%, unless they have a “credible” strategy to diversify far. thermal coal.

“However, the bank is not disclosing what it considers to be a ‘credible transition strategy away from thermal coal mining or coal-fired power’, unlike some of its European peers,” the letter said.

In its 2020 Sustainability Report, the bank said its new restrictions had already seen it turn down some deals, adding that it further decided not to strike a deal beyond those policies, including a bond issue for a large thermal coal mining and power generation company, the basis of sustainability.

He said he had also developed sector-specific energy transition frameworks for clients active in a number of areas, including coal mining.

Despite this, investors have said they want the bank to set a firm date by which it will phase out lending to coal companies, in line with recommendations from the Intergovernmental Panel on Climate Change to do so in countries. OECD by 2030 and the rest of the country. world by 2040.

A spokesperson for Credit Suisse said in response to a request for comment: “We are in constant close contact with ShareAction regarding our energy policy and our climate strategy, appreciate their constructive engagement and their recognition of the significant progress we are making. have accomplished ”.

For Credit Suisse clients currently involved in the industry or using coal in one way or another, investors have asked the bank to help them develop, publish and implement plans to phase out carbon. coal in accordance with IPCC recommendations by December 2023 at the latest.

Finally, the group said Credit Suisse should limit its general financing, underwriting and advisory services to companies developing new coal mines and coal-fired power plants.