Investor BNP Paribas drops coal from its portfolio

BNP Paribas has said it will let go of up to €1bn (£850m) in coal assets as the investor seeks to reduce the environmental impact of its portfolio.

The bank’s asset management group today announced plans to shed stocks in companies who mine or generate electricity from coal.

Read more: Germany to completely phase out coal by 2038

The new policy, which is set to come into force at the beginning of 2020, will impact firms which make more than 10 per cent of their revenue from coal, or account for above one per cent of global production.

It will also exclude businesses with a carbon intensity above the 2017 global average, or 491g of carbon dioxide per kilowatt hour. Investments must also meet the International Energy Agency’s 327g target for energy generators by 2025.

Companies who do not meet the requirements will be given a chance to show “credible commitments” to do so, the bank said.

It comes as major investors put increasing pressure on their portfolios to strip out companies which go against the Paris climate change agreement.

Last week Norway’s $1tn (£750bn) sovereign wealth fund announced it would exclude oil and gas firms from its benchmark index, while the European development bank has said it will no longer fund coal mines.

However, BNP acknowledged that it is abandoning an already sinking ship, as renewable energy makes inroads on territory formerly held by fossil fuels.

Read more: European development bank pulls plug on coal mines

“From an investment perspective the outlook for the coal industry looks increasingly uncertain as less carbon-intensive fuel sources, in particular renewables, become ever more competitive,” said global head of sustainability research Mark Lewis.

“The main renewable technologies already compete favourably with fossil fuel power generation, and in the best locations for wind and solar globally, new build costs are actually below those of existing fossil-fuel plants. The trend will continue as costs for all renewable technologies continue to fall.”

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