To Fight Climate Change, We Finally Need to Understand Its Biggest Driver: The Coal Industry

In 2015, Urgewald played a key role in convincing 2 of the world’s largest investors - the Norwegian Government Pension Fund and the German insurance giant Allianz - to divest from most of their coal holdings. These are still the two biggest coal divestment actions to date. During our research for these campaigns, we discovered that the industry definitions and tools investors use to manage their portfolios are not well suited for identifying coal investments. Even today, most coal databases used by the finance industry only cover around 100 companies and fail to capture many important players. This realization led to what has been a huge undertaking for a small organization: A global mapping of companies operating all along the thermal coal value chain. The feedback we received from first ‘testers’ of our ‘Global Coal Exit List’ (GCEL) such as AXA has been very encouraging and confirms that the enormous effort that went into this project was worthwhile.

The Global Coal Exit List not only covers all of the largest coal producers and coal plant operators, it also captures many of the specialized equipment providers, coal processers, traders, coal transporters and other businesses which are part of the thermal coal value chain. All in all, the GCEL features 775 parent companies and over 1,100 subsidiaries and provides the most comprehensive snapshot of the global coal industry to date. It is the first tool that allows climate-conscious investors and NGOs to easily assess the coal content of a specific investment portfolio. 

A Forward-Looking Divestment Tool

A special feature of the GCEL is the fact that it also identifies which companies are planning to expand coal mining or build new coal power stations. This is crucial information as investments in these companies bar our chances of bending the emissions curve down. Climate science tells us that emissions need to start declining by 2020 and need to come down by 50% each decade. Each new coal plant, however, makes this more and more unlikely. 

We realize investors will use this database in various ways and that for many financial institutions, divestment is not accomplished in one step, but in a series of steps. We therefore decided to highlight a group of 120 companies, which should be at the top of every investor’s divestment list: The top coal plant developers. Further investments in these companies are an entry ticket to a 4°C world and must be stopped now. 

We hope the Global Coal Exit List will help to both speed up divestment and make it more impactful. We look forward to receiving feedback on the GCEL and assisting investors, banks and NGOs in using this new tool.