Standard Chartered’s new climate policy aims for failure

28 October 2021

  • Policy fails to rule out oil and gas expansion, as required by the IEA’s Net Zero by 2050 scenario,
  • Major coal mining clients to continue to enjoy Standard Chartered’s financing,
  • Market Forces-coordinated shareholder resolution stands, and will go to StanChart AGM

Announced on the eve of the COP26 climate summit in Glasgow, Standard Chartered Bank’s new climate policy upholds the bank’s status as a climate laggard, according to environmental finance organisation Market Forces.

Market Forces recently filed a shareholder resolution for Standard Chartered’s 2022 annual general meeting. The resolution, co-filed with the Friends Provident Foundation, calls on the bank to live up to its ‘net zero by 2050’ pledge by following the International Energy Agency (IEA)’s ‘Net Zero by 2050’ pathway. The pathway, which gives a fifty-fifty chance of meeting the Paris Agreement’s 1.5°C temperature target, states that as of this year, no new coal mines, coal plants, or oil and gas fields can be built.

Standard Chartered’s new policy fails miserably to live up to the IEA’s net zero by 2050 scenario:

  • The policy allows Standard Chartered to continue financing coal giants like Indonesia’s Adaro Energy, which has no plans to stop extracting coal and plans to continue coal production at current rate until at least 2040. Adaro has 1.1 billion tonnes of coal reserves, which if combusted would be equivalent to the annual emissions of India. Standard Chartered’s own analysis rated Adaro’s business plan as aligning with a catastrophic ‘hothouse Earth’ scenario of 5-6°C of global warming, yet nothing in the updated policy clearly rules out additional funding of Adaro and other miners in the same position. 
  • The policy allows the continued financing of new oil and gas projects, as well as companies seeking to expand oil and gas, at a time when the IEA has said there can be no new fossil fuel supply in order to meet the goal of net zero by 2050. This year alone, Standard Chartered has funded many companies expanding the fossil fuel industry. This support includes financing for Saudi Aramco, the world’s single largest corporate carbon emitter, the troubled Mozambique Liquified Natural Gas (LNG) project, and financing for the Malaysian oil giant Petronas to develop an additional oil and gas processing unit off the Brazilian coast. All of these deals would be permissible under the updated policy.
  • The bank says it will stop financing “companies that are expanding in thermal coal.” This principle is welcome, however, this will only apply ‘at the client level,’ allowing parent companies to still recieve finance and fund their coal-expanding subsidiaries. The bank has also not clarified the metric that it will use to determine whether a company is ‘expanding in thermal coal’ – whether it will be determined by, for example, tonnes of coal mined or revenue generated.
  • No coal exit date – unlike competitors like HSBC, the bank has still not committed to finally end the financing of coal. Under this policy, in 2030 Standard Chartered can still fund diversified companies with significant coal interests.

Adam McGibbon, UK Campaign Lead at Market Forces, said: the International Energy Agency has said ‘net zero by 2050’ means an end to fossil fuel expansions. Standard Chartered doesn’t seem to realise this includes oil and gas projects around the world. The bank needs to either write a real climate policy that aligns with the IEA scenario and rules out all fossil fuel expansions worldwide, be they coal, oil or gas, or drop its increasingly flimsy claim to have a net zero by 2050 target.

Our door remains open to withdrawing our shareholder resolution, if Standard Chartered pledge to do what science demands.”

Yuyun Indradi, Trend Asia Indonesia Executive Director, said: Since 2006, Standard Chartered has provided over US$400 million to Adaro Energy. In April 2021, it helped provide another US$400 million for Adaro Energy’s coal mining as part of a syndicate of banks. If Standard Chartered’s new policy allows the bank to continue to fund Adaro Energy, who has no plans to produce any less coal, the policy can’t be worth very much. 

Notes for editors:

  • Market Forces campaigns for financial institutions that have custody of our money to protect not damage our environment. www.marketforces.org.uk 
  • The Market Forces resolution text is available here, and the resolution supporting statement is here.
  • The influential Banking on Climate Chaos report, the most comprehensive overview of bank financing of fossil fuels, shows that in the four years following the signing of the Paris Agreement, Provided US $31.42 billion to the coal, oil and gas sectors since the 2015 Paris Agreement was signed.