World Bank to End Upstream Loans, Exxon to Improve Reporting
The World Bank Group announced December 12, at the One Planet Summit hosted by French president Emmanuel Macron, that it “will no longer finance upstream oil and gas after 2019” while a commitment from ExxonMobil on climate action reporting has also garnered attention.
The World Bank qualified its pledge by saying that “in exceptional circumstances, consideration will be given to financing upstream gas in the poorest countries where there is a clear benefit in terms of energy access for the poor and the project fits within the countries’ Paris Agreement commitments.” But it made other commitments relating to funding of decarbonisation projects, and greater transparency.
Among the latter it said “starting next year, the World Bank Group will report greenhouse gas emissions from the investment projects it finances in key emissions-producing sectors, such as energy. The results will be published in late 2018, and annually thereafter.”
US supermajor ExxonMobil meanwhile has informed shareholder activists that it will be changing its reporting practices. The Church of England said December 12 that Exxon shareholders have been informed by the Exxon board that it is committed to implementing a resolution on climate change disclosure passed May 31 2017 at its AGM, with 62.3% of shareholders voting in favour. The resolution asked Exxon to report on how its business model will be affected by global efforts to limit the average rise in temperatures to below 2-degrees Celsius.
The church --which together with New York State’s comptroller proposed the May 31 resolution – said December 12 it welcomed the commitment from ExxonMobil, adding that BP, ConocoPhillips, Royal Dutch Shell and Total had endorsed the 2-degree scenario analysis, and that asset managers such as BlackRock and State Street Global Advisors had called for improved climate risk disclosures.
Returning to the World Bank, its International Finance Corporation subsidiary is to invest up to $235mn in the 'Green Cornerstone Bond Fund', a partnership with Amundi, the joint venture of French banks Credit Agricole and Societe Generale, to create the largest ever $2bn green-bond fund dedicated to emerging markets; the fund is already subscribed to third parties at over $1bn.
French insurance giant AXA also said December 12 it would quadruple its green investments target to €12bn by 2020, while making over €3bn of extra divestments from carbon-intensive energy producers, such as coal and oil sands. French bank BNP Paribas said two months ago it would cease financing firms involved in oil sands, and shale oil and gas, and would not back Arctic exploration.
This week alone, however, multilateral banks have lent to major coal promoters. European Bank for Reconstruction and Development (EBRD), one of 30 signatories of a pledge this week to reduce such lending, agreed a $22mn loan to a Jordanian solar plant being developed by Saudi ACWA, the developer of the Middle East’s biggest coal-fired plant. ACWA a year ago completed $2.47bn financing of its $3.4bn 2,400 MW Dubai plant that will open in phases between 2020 and 2023. In contrast, EBRD said December 13 it would lend €24mn to Turkey's Enerya to expand its gas network to 18 towns "delivering a cleaner, cheaper and more secure energy supply."
Non-governmental group Bankwatch reported December 11 that EBRD lent €4.05bn to fossil-fuel projects in 2010-16 – more than double its support for renewable energy in that period – though Bankwatch includes loans to grid infrastructure run by coal-fired generators in its figure, as well as to gas projects. The €4.05bn does not include EBRD’s loan this October of $500mn to Turkish gas project Tanap, also criticised by Bankwatch. However another multilateral bank, the EU's European Investment Bank, has deferred decisions to fund both Tanap and allied project TAP into 2018 due to human rights concerns.