2020-10-28 Reclaim Finance
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Natixis has just published the details of its new coal policy, the broad outlines of which were announced last May at its General Meeting.
The main measures already announced last May and confirmed in the new policy include:
- The exclusion of coal mine and power plant developers;
- Exclusion of companies deriving more than 25% of their income from coal;
- The commitment to exit the coal sector by 2030 in the European Union and OECD countries, and by 2040 in the rest of the world.
The main developments cover the following points:
- Natixis is filling an important gap in its policy: the request for the adoption by 2021 of an exit plan from the coal sector for those companies that will not be covered by the exclusions adopted in May;
- While the May announcement only covered banking activities, the policy announced today also covers investments made by its insurance branch and its main asset management company, Ostrum. These latter subsidiaries of the Natixis group will specify their commitments at a later date.
Natixis’ coal policy is approaching a robust exit policy from the sector but still has concerns about the following points:
- It does not exclude coal infrastructure developers, who can play a major role in opening up new coal deposits or bringing entire countries into the vicious circle of coal dependence, such as Kenya or Bangladesh;
- Contrary to the old coal policy published in 2016, the 25% exclusion criterion only covers revenues for all coal companies, including power generators. This is a significant regression since the share of electricity volumes generated from coal is a more relevant indicator for these companies and can significantly impact the number of excluded companies;
- The temporality and enforcement mechanism of the exclusions on the CIB side are questionable, and their complexity suggests that Natixis intends to adopt general principles while retaining the possibility of financing a few companies for an additional year, even if they are more than 25% exposed to coal or develop new coal mining and power plant projects. On the investments side, the implementation, date of the exclusion criteria in the new policy is postponed to early 2022, which is far too late;
- It does not have any exclusion criteria based on absolute thresholds, such as tonnes of coal produced annually or GW of coal-fired power generation capacity. This allows highly diversified companies to slip through the cracks, which are often the largest players in the sector;
- The request for an exit plan from the coal sector to the remaining companies in the portfolio, in line with the exit dates of the Natixis group, does not mention the need for this exit to take place through the closure of existing coal assets, and not through their resale.
“The publication of Natixis’ new coal policy reminds us why it is important to take the trouble to analyze the announcements of financial players in the slightest detail. The improvements made in the policy compared to the announcements made last May are unfortunately largely offset by new loopholes that will allow some companies to escape the exclusions adopted,” says Yann Louvel, a policy analyst at Reclaim Finance.
“Laurent Mignon of BPCE/Natixis claims that coal phase-out is a done deal for the French banks and his own, but he’s setting up sophisticated strategies to postpone the real effort: demand that companies like Éngie adopt a coal phase-out plan by next year, not two years from now,” says Lucie Pinson, founder and executive director of Reclaim Finance.