2020-09-09 Reclaim Finance
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UniCredit has just published a policy explaining how the bank intends to meet its commitment to exit the coal sector by 2028, as announced in August 2020. According to the Coal Policy Tool, the policy includes substantial exclusion and engagement criteria that will allow the Italian bank to effectively cut all services to the expansion of the coal sector and progressively phase-out its exposure to bring it to close to zero by 2028. UniCredit is becoming the 16th financial institution with a high-quality coal policy, after 15 French financial institutions including Crédit Agricole and AXA.
UniCredit committed in August 2020 to exit coal by 2028. The Italian bank has just published its detailed policy, proving the seriousness of its objective and setting forth an action plan.
- UniCredit is ending all dedicated financing for new and existing coal projects and is also excluding companies building and expanding new coal assets, as well as buying existing projects;
- Beyond excluding coal developers, UniCredit also excludes other companies based on their activity in the coal sector. Similarly to Natixis, UniCredit excludes all companies generating more than 25% of their revenues from coal. The main weakness of the policy is that UniCredit doesn’t use the right metric for measuring the coal exposure of power companies – they should be excluded based on the percentage of coal in the power mix – and fails to adopt an absolute exclusion threshold, letting some of the biggest coal companies with diversified revenues fall through the cracks;
- Fortunately, revenue-based exclusion and the lack of an absolute threshold will be less problematic beyond the end of 2021. As with several French financial institutions, UniCredit requires all coal companies to adopt a plan to phase-out the coal sector by the end of 2021. UniCredit will exclude companies that fail to adopt such a plan. UniCredit should improve this policy by specifying that companies should close rather than sell coal assets to decrease the actual size of the coal industry.
This policy qualifies as a high-quality coal policy when held up to the Coal Policy Tool’s criteria. 15 other financial institutions have already adopted such policy; now, UniCredit has become the first non-French financial institution to join the league.
Lucie Pinson, Founder and Executive Director of Reclaim Finance states: “The time for incrementalism has passed. All financial institutions must urgently rise to the challenge of developing coal policies of the highest standard, as defined by the Coal Policy Tool. UniCredit is responding to this climate emergency by adopting a policy that not only prevents the expansion of the coal sector but supports its phase-out. UniCredit is proof that climate-conscious coal policies are spreading beyond France—which international financial institutions will be next?”