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Daily ESG Briefing: Banks use ‘grief to income ratio’ for Aussie coal deals, complains firm

The latest developments in sustainable finance

An Australian coal mining company has told parliament that banks in the country are using a “grief to income ratio” when assessing refinancing for the industry. In a submission to a parliamentary inquiry into investment in export industries, Centennial Coal complained that domestic banks’ refusal to finance coal was also dissuading Asian banks from committing money. Regulators were also making “unhelpful” comments, it added.

Japan’s Financial Services Agency has released basic guidelines on climate transition finance. The guidelines aim to help push more funding into transition finance, and ensure the credibility of ‘transition finance’ as a label. They are aligned with the International Capital Markets Association’s Climate Transition Finance Handbook, published in December, and provide “examples and interpretations as a reference for market participants who [are considering] concrete actions to climate transition finance”. 

The Asian Development Bank (ADB) has unveiled, via its new draft energy policy, that it will stop financing coal mining, fossil fuel exploration, drilling or extraction, new coal-fired capacity for power and heat generation, and any facilities associated with new coal generation. The bank said it sought to “support the phase-out of coal-fired power plants in the region”. Hasan Mehedi from the Coastal Livelihood and Environmental Action Network, welcomed the move, but said: “ADB still has to urgently phase out fossil gas, waste to energy, and large hydro projects to achieve the Paris Goal of staying below 1.5 degrees.”

Manulife has become the latest firm to commit to reducing its investment portfolio to Net Zero by 2050, making a commitment to the Science Based Targets Initiative. The Canadian firm, which says it is already carbon neutral in its operations, aims to reduce its scope 1 and 2 emissions by 35% by 2035.

Macquarie, often considered the world’s biggest infrastructure investor, has reportedly pledged to stop lending to coal projects by 2024. The investment bank has A$100m (€64m) in coal, despite having cut its exposure by around 50% over the past couple of years. It said that it expected its lending exposure to coal to “run off” within three years, although it will continue to finance oil and gas developments. 

The Bank for International Settlements’ Innovation Hub has teamed up with Italy’s central bank to challenge private firms to develop digital solutions for green data collection, verification and sharing; as well as analysis of climate risk and better connection of projects and investors. Winners of the ‘G20 TechSprint’ challenge will be announced in October and be awarded a cash prize. 

The Church of Scotland has exited oil and gas companies as part of its plan to become Net Zero by 2030. The church said in its Faith Impact Forum report that it held no shares in oil and gas companies, and any future investment would only be made if “evidence existed that its strategy and implementation” was Paris-aligned.