Loaded for Bear: ‘Dear banks, please treat us fairly’ — a letter from the coal industry

FutureCoal: The Global Alliance for Sustainable Coal sent an open letter on Tuesday, 2 September to around 700 global financial institutions – banks, asset managers and investment institutions. 

It’s the latest move in the multi-pronged fightback I recently reported on by the backers of the fossil fuel that accounts for more of the greenhouse gas emissions linked to climate change than any other. 

Read more: As our planet burns, the coal sector is reinventing itself 

And it certainly makes for interesting reading from my sweltering perch in Johannesburg, where “Spring Day” should be renamed “Summer Day.” 

To wit, coal has been making a comeback of late, defying its obituary writers who wanted to see its funding slashed to achieve the goal of “net zero emissions” by 2050. 

According to FutureCoal, commercial banks invested more than $130-billion in the sector in 2024, a rise of $7-billion from 2023 levels. And global coal consumption reached a record high last year.

The letter this week, from Mike Teke – the new chairman of FutureCoal, who is also CEO of South African coal producer Seriti – calls on the world of global finance to “... fund coal, metallurgical and modern, low-emission thermal coal, fairly and equally”.

The letter goes on to ask that financiers “... to evaluate thermal coal on the same basis as metallurgical coal. There is no practical reason nor credible justification to exclude responsibly stewarded coal from funding.” 

Metallurgical coal is a crucial component of steel making, while its thermal counterpart’s primary use is power generation. Both have massive carbon footprints. 

But the coal sector maintains – in the face of a massive deposit of scepticism – that it is getting greener, including an embrace of renewable energy to power the mines that produce the stuff.

FutureCoal contends that its Sustainable Coal Stewardship (SCS) framework is a tech-driven pathway that reduces emissions from coal activities by up to 99% across the value chain.

“We are not seeking to replace renewables, but to ensure all resources are recognised for their current and future potential in the global energy mix. The energy transition must be inclusive, pragmatic and fact-based,” the letter says.

“If your institution is reviewing its energy portfolio or ESG screening policies, I welcome the opportunity to engage with you directly on how the SCS framework can align with your investment goals.”

And given the increase of investment in coal – and the number of banks that have dropped out of initiatives such as the Net Zero Banking Alliance – it seems that financial institutions are indeed reviewing their energy portfolios. 

“What we’ve noticed is that people are trying to find their way back to coal. And coal funding is very vast across the spectrum, we are talking about a range of projects,” FutureCoal CEO Michelle Manook told an online media round table on Tuesday. 

“There are some interesting political and financial cues being put out there on building and progressing coal opportunities.” 

And lo and behold, as if on cue, the Australian government just approved an extension of a Glencore thermal coal mine, which will allow it to operate for an additional two years to 2025.

Developments like this suggest the letter may receive a positive reception among some bankers. 

The terminology of the letter is also interesting, and in some ways borrows from leftist discourse and the vocabulary of the “sustainable development” crowd: “fairly and equally,” “sustainable,” “stewardship” and “inclusive”. 

The reference to ESGs – environmental, social and governance issues – is also revealing because it has become a big part of current corporate culture, notably in the mining sector. 

It’s also important to note that there is no climate science denialism at work here – hence the emphasis on emissions reductions. Climate science deniers, many of whom believe the planet is 6,000 years old, are not overly concerned with greenhouse gas emissions. 

The message is clear: the coal sector is cleaning up its act, making it more palatable for investment in our age of mounting environmental concerns. 

It is certainly true that coal is a source of energy, and energy is not going to fade away anytime soon. Coal still accounts for 33% of global electricity, and we are not going to shut the lights tomorrow. 

It’s also the case that the accelerating pace of technological change surely holds the promise that coal emissions can be significantly reduced. And one might add that renewable sources of energy also have a carbon footprint. 

But it’s also the case that the technologies behind renewable energy are also evolving at a rapid rate and becoming more efficient, and cheaper. 

Some will argue that we cannot dispense with coal. Among other matters, look at the carnage of job losses. In South Africa, with our sky-high unemployment rates, coal mining employs almost 100,000 people, most of whom have several dependants. 

But then, there were lots of typists around in the 1980s and well into the 1990s. That profession effectively no longer exists. And the drive to renewable energy is creating jobs galore.

It’s also worth noting that climate activists have been quick to condemn the approval to extend that Glencore coal mine in Australia. They may already be busy crafting letters to banks as counterpoints to the one that FutureCoal just sent out. DM