Goldman Sachs, which was applauded by environmentalists for its 2019 commitment to curb fossil fuel funding, is on fire over a $ 150 million loan last week to Peabody Energy, the world’s largest private-sector coal producer.
The deal, which was organized to bolster Peabody’s derivatives in the wake of the market turmoil created by Russia’s invasion of Ukraine, underscored the ambiguity in Goldman’s initial commitment to cut funding for thermal coal mining companies, environmentalists said. In 2019, the bank said it would only support companies that move away from coal at a reasonable pace.
Goldman’s coal guarantee for 2019 was considered the strongest adopted by any major US bank, said Rainforest Action Network, a San Francisco-based environmental nonprofit.
But now the Peabody deal “demonstrates how vague it is and therefore does not commit [bank’s] The policy is, “said Alison Kirsch, director of policy and research at RAN.
As the only bank in the Peabody deal, Goldman “does not appear [it] Get out of the coal, “she said.
Goldman Sachs declined to comment.
Since 2019, other banks have gone further in restricting transactions with coal companies. In December, HSBC announced that it would gradually abolish thermal coal financing in EU and OECD countries by 2030. A global phase of coal will be completed by 2040, HSBC said.
For Goldman, “the main issue here is how vague the coal policy is,” said Jan Lovell, a senior policy analyst at Reclaim Finance, a non-profit group affiliated with Friends of the Earth. The bank has room to twist “open to the bank’s internal interpretation, making it difficult to prove a clear breach of policy,” he said.
Peabody said coal derivatives contracts it signed in 2021 were hurt by the rise in coal prices and that the company was hit by a $ 534 million margin requirement, which necessitated a Goldman loan. Shares of Peabody, which owns 17 active coal mines in the U.S. and Australia, rose 500 percent from a year earlier.
Global banks Were exposed to increasing criticism On their business deals with fossil fuel companies – and shareholders continued to step up the pressure. Citigroup lost last week a request to the Securities Authority to block a shareholder offer requiring the bank to stop lending and underwriting for the supply of new fossil fuels.
“A $ 150 million loan to a coal company that does not violate Goldman’s so-called ambitious climate policy should be all the proof we need that it is not possible to leave Wall Street banks to their own devices to fix their climate problem,” Adele Sherman said. Sierra Club’s Fossil Finance Campaign Campaign Representative.
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