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May 8 (Reuters) - A new study provides some interesting data around a talking point from U.S. Republican politicians: why should western banks take steps to limit fossil fuel financing when China is the biggest source of greenhouse gas emissions?
You can read about the study on banks' coal lending below. I've also included links to stories about Berkshire Hathaway's famed annual meeting, and about new lines of business for Italy's mafia.
I welcome connections on LinkedIn. If you have a news tip, potential content, or general thoughts you can also email me at ross.kerber@thomsonreuters.com This week's most-read
Buffett says Berkshire in good hands, lauds Apple despite lowering stake
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Clean energy ETFs start to outperform key oil & gas ETF
Chinese banks finance a lot of coal Commercial banks provided $470 billion worth of lending and underwriting activity to the global coal industry over the past three years, a new report found, with $324 billion of that coming from Chinese financial institutions.
The report from German activist research organization Urgewald focuses on banks' financing of coal-related companies, some $136 billion last year. That was 20% less than in 2016, the year the Paris climate agreement entered into force, reflecting factors like slowing coal industry growth and stricter lending policies especially by European banks.
But the decline was hardly near the level of reduction needed to meet goals like net-zero carbon emissions by 2050. Of 638 banks reviewed only about 140 significantly cut their lending and underwriting for coal, the report found, and 75 banks increased their support.
The data "shows that banks are still injecting hundreds of billions of dollars into the industry, which is our climate’s worst enemy," said Katrin Ganswindt, Urgewald's head of financial research, in a briefing on the research. Urgewald's review, issued on May 2, breaks down activity by region. Some of its findings align with arguments from U.S. conservative analysts and politicians who say efforts to limit western banks' fossil fuel activities focus on the wrong targets.
Criticizing the Paris agreement in a December opinion piece, for instance, Wyoming Republican Senator John Barrasso wrote that "this one-sided agreement helped China's economy and hurt ours" such as by leaving China able to keep building new coal plants.
Urgewald's research showed the world's largest coal financier over the past three years was China International Trust Investment Corp, or CITIC. Its coal financing in 2023 alone was $9.6 billion, up 63% from 2016.
In contrast the largest U.S. coal financier last year was Bank of America, with $2.8 billion, 30% more than in 2016.
Richard Morrison, senior fellow at the free-market Washington think tank Competitive Enterprise Institute, said the Chinese banks' state connections set them apart from big Wall Street banks. But the findings suggest activists need to exert more pressure outside the U.S. when it comes to emissions financing, he said. "At a certain point climate activist organizations are going to have to stop preaching to the choir in the Western-aligned world and turn their efforts to the counties that, for them, represent the worst offenders," Morrison said.
A CITIC representative did not respond to questions.
Asked about the report, a Bank of America representative referred to its commitment to phase out financing by 2025 to companies that derive 25% or more of their revenue from thermal coal mining, a narrower set of companies than Urgewald counted.
Exposure to thermal coal mining has fallen 94% since 2019 to $9.1 million as of Dec. 31, "less than 0.0008% of our total committed commercial credit exposure across all industries," according to a Bank of America report. Urgewald says all banks should cut coal financing. Ganswindt said via e-mail that financing from banks including CITIC has dropped in recent years, but most U.S banks, including Bank of America have backed more coal.
"Financing from the U.S. did increase, even though as an historic emitter the U.S. should do more to avoid new emissions than China," Ganswindt said.
Company News Exxon's arbitration case that could block Chevron's purchase of Hess will extend into 2025, Exxon CEO Darren Woods said in an interview on Monday, ahead of a coming vote by Hess shareholders on the deal.
Britain's Local Authority Pension Fund Forum, the biggest collective owners of UK shares, warned the London Stock Exchange against weakening listing rules and governance standards to help attract fresh business.
Hedge fund Shah Capital urged Novavax shareholders to vote against three directors and opposed proposals related to executive compensation, weeks after pushing for a board shakeup at the COVID-19 vaccine maker.
New York's DiNapoli opposing most Exxon directors A spokesman for New York State Comptroller Thomas DiNapoli, who oversees the state's Common Retirement Fund, said it will vote against most directors at Exxon over climate concerns, following the decision to divest some Exxon holdings in February. In addition, a suit the company filed against shareholder activists "is certainly another factor informing our decision," the spokesman told me. The fund had about 5 million Exxon shares as of March 31.
Via e-mail, an Exxon representative said "We’re disappointed the N.Y. Common Retirement Fund didn’t bring its concerns directly to us. We welcome dialogue with all of our shareholders, even those who have restricted their investments in ExxonMobil."
On my radar
Item #6 at Amazon's annual meeting on May 22 calls for a review of whether its products contribute to human rights violations, citing contracts including one with the Israeli government's Project Nimbus. Debates over corporate exposure to the war in Gaza so far have played out at U.S. colleges, but the shareholder resolution will bring the discussion to a new forum. A planned New York State tax credit would provide $90 million for local news outlets, which advocates say would help rebuild an industry decimated by chain ownership and advertising shifts.
In last week's newsletter I wrote about a study finding that while the term "ESG" has fallen out of favor, many companies continue to implement ESG-like practices. My followup, back-of-the-envelope LinkedIn poll found something similar: just 7% of responses reported their company has dropped its ESG efforts, while 47% said their company uses the term less but has maintained the effort. Also, 47% clicked on "We still love ESG!" OK it was just 15 votes but now I feel validated. If you disagree, you can comment on the poll here.
