Sumitomo Mitsui Banking Corp (SMBC) plans to phase out corporate and project finance exposure to coal mining by 2040, although it does not have a concrete timeline for reducing support to trade finance, a senior company official said yesterday.
The main banking arm of Sumitomo Mitsui Financial Group said in disclosures to investors last year that it would halt funding for new mines, expansion of existing ones and related infrastructure, but stopped short of providing a timeline to end corporate finance for companies linked to coal mining.
The bank would have no project or corporate finance exposure to coal mining and coal-fired power plants by 2040, SMBC managing executive officer and cohead of Asia-Pacific division Rajeev Kannan said
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Critics have previously pointed to the ambiguity on corporate financing potentially providing a loophole to banks lending to pure-play coal miners.
However, “some level of trade finance” could still be available for coal dealers shipping critical fuel supplies for power plants, Kannan said in an interview with Reuters.
“But even that kind of support, over a period of time, will go away,” he said.
Environmental advocates are increasingly pushing Japanese megabanks away from investing in or financing fossil fuels such as coal, which still has strong support in Japan. All the country’s banks have committed to stop lending to new coal-fired power plants.
Japan’s second-largest bank by assets was getting most of its new energy funding opportunities in the renewable energy sector, followed by hydrogen, Kannan said, adding that the group would progressively reduce exposure to gas-related transactions.
Kannan said decisions on offering financial support to carbon capture were “not easy” as it would still mean developing a coal-based utility, but called ammonia cofiring a “good option” provided that power generated from coal was quickly displaced by ammonia.
“Big picture, we are focused on our finance emissions targets,” he said. “We’ll have to see how does the portfolio reduce the total quantum of finance emissions over a period of time.”
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