RWE’s mining project banks and managers…

PARIS (Agefi-Dow Jones)– A village in western Germany has become a symbol of the environmental fight against global warming.

Lützerath will be shaved by the energy company RWE Expanding the Garzweiler open-pit coal mine – the largest in Europe.

Producing electricity using lignite, a highly polluting, very young coal mined in the area, emits about one tonne of carbon dioxide (CO2) equivalent per megawatt hour (MW).

The focus is now on the financial players backing RWE.

Activists threw 250 kilograms of coal in front of the Swiss bank Pictet on Thursday.

French banks are far from being left behind.

According to the non-governmental organization Urgewald, which specializes in coal companies, the origin of the “Global Coal Output List” database of companies active in thermal coal, BNP Paribas and Societe Generale Between 2019 and 2021, it allocated 800 million euros in funding to the electrician, which is 7% of the funds received by the multinational company during this period.

Banks contacted by L’Agefi declined to comment on the figures or the RWE case.

The expansion of the Garsweiler field is justified by RWE due to the needs created by the Russian gas crisis.

It is also the result of an agreement signed with the German government in October 2022 that allowed the project in return for RWE to exit coal in 2030 versus 2038 previously.

Flaws of exclusion policy

The exploitation of the new generating capacities implemented by RWE seems to be contrary to the climate commitment of the French banks, which have adopted clear policies in terms of phasing out coal.

BNP Paribas and Société Générale “accepted an exemption limit of 10 million tonnes (Mt) of thermal coal production per year, which was largely exceeded by RWE, which produced 52 Mt in 2021 and 63 Mt in 2022, but this exemption was only limited to RWE subsidiaries that directly own or operate coal mines are the main flaw in these policies, not at the group level,” explains the NGO Reclaim.

The devil really is in the details. In 2020, BNP Paribas announced that it would “shortly terminate relationships with any client developing new coal-based generation capacity”.

Similarly, Societe Generale noted in July 2020 that it “no longer provides products and services to companies developing new thermal coal-related mining, power plant or infrastructure projects, except those exclusively dedicated to the energy transition.”

However, the expansion of the Garzweiler field by RWE cannot technically be considered as capacity expansion.

It is “a physical extension of the current mine pit. However, the area concerned has been part of the mine site since the first approval by Garzweiler in 1987, so no additional approval is required,” Urgewald admits.

Coal currently accounts for a third of RWE’s electricity generation and 22% of its turnover.

But the company is also investing in the development of renewable energy and plans to phase out coal in 2030.

A trajectory consistent with the commitment made by French banks.

BNP Paribas and Société Générale have pledged to finance coal-related companies in the European Union and Organization for Economic Co-operation and Development (OECD) countries by 2030.

BNP Paribas reminds that the L’Agefi group “has stopped financing electricity companies that do not have a plan to completely abandon coal in accordance with their commitments from 2020.

This caused almost half of its customers to be excluded from the power generation sector.

For its part, Societe Generale reminds that since 2016 it has not financed “projects” dedicated to the exploitation of coal. In other words, it is not funding RWE’s controversial mine expansion project.

Key managers in RWE capital

Major shareholders of RWE include BlackRock, GIC, Pictet AM, Vanguard, DWS but also the French AmundiNatixis and Carmignac.

Few French investors have concrete answers in RWE.

“This reveals the weakness of the plans of financial players in particular, as most of them have not adopted all the exclusion criteria of the Global Coal Exit List, and these criteria are not sufficient to ensure a robust exit policy from the sector,” ReclaimFinance believes.

The management company claims that Amundi has only 0.09% exposure to coal at the end of 2021.

Like Crédit Agricole, it is committed to phasing out coal by 2030 in Europe and the OECD, which is in line with RWE’s strategy. Amundi favors dialogue, but did not hesitate to criticize the energy company’s late coal exit strategy at the 2020 AGM. However, the Amundi policy plans to exclude companies developing these fossil fuel-based projects…

But “we don’t see a company lifting a finger when it needlessly bulldozes a village 200 kilometers from the French border”, blames Reclaim Finance.

Axa chooses to exclude

Some investors, on the other hand, preferred pure and simple exclusions.

The Norwegian sovereign fund thus removed RWE from its portfolio in 2019.

Axa has announced that it will stop insuring RWE, like other companies with a presence in coal.

The German energy company is on the exemption list due to its equity and loan portfolio.

The insurer also “engages shareholders with issuers that fall outside the exclusion criteria by requiring robust transition plans with science-based carbon reduction targets, including measures to close coal-fired power plants by 2030. OECD and the rest of the world by 2040”.

-Aurélie Abadie and Thibault Vadjoux, L’Agefi ed: VLV

Agefi is the owner of Agefi-Dow Jones agency

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