The Paris Agreement and the global divestment campaign has secured one of its biggest victories to date, after banking giant Deutsche Bank announced it would halt investment in new coal projects in line with its commitment to the international climate change treaty.
In a short statement on its website under the heading ‘amended guidelines for coal financing’, the European banking giant said the company and its subsidiaries “will not grant new financing for greenfield thermal coal mining and new coal-fired power plant construction”.
It added that the bank will also “gradually reduce its existing exposure to the thermal coal mining sector”.
The bank said the reforms were directly linked to its support for the Paris Agreement, which in late 2015 committed all governments to the development of a net zero emission economy this century.
“By signing the Paris Pledge for Action alongside over 400 private and public organizations, the bank has welcomed the universal climate agreement made at the 2015 Climate Summit in Paris,” the statement read. “This emphasizes the bank’s commitment to protect the climate and to contribute to the overall targets set by the Paris Agreement to limit global warming to 2 degrees above pre-industrial levels.”
The move also follows a high profile 2014 campaign in Deutsche Bank’s native Germany, which led to the bank pulling out of a deal to invest in the expansion of the Abbott Point coal port in Australia.
The latest decision is part of a growing trend that has seen thousands of investors commit to divest their holdings in coal and other carbon intensive projects, following warnings they could be investing in a ‘carbon bubble’.
Some analysts have warned that if policymakers honour the commitments in the Paris Agreement demand for coal, oil and other carbon intensive fuels will fall sharply in the coming decades as rival clean technologies become increasingly dominant.
They argue that as a result many fossil fuel assets that promise long term returns are overvalued and could deliver diminishing returns in the future, with the most carbon intensive assets, such as coal, deemed the most at risk.