New proposal could set international standards for coal financing policies
![](https://sustainabilityeconomicsnews.com/wp-content/uploads/2024/06/Depositphotos_19174019_S.jpg)
Some of the world’s major economies are planning to finalize a plan to halt new private-sector funding for coal projects ahead of the 2024 UN climate summit.
If approved, the Organisation for Economic Co-operation and Development’s draft proposal would mark the first initiative by a multilateral institution to restrict financing for coal, Reuters reported.
Coal is one of the largest contributors to climate change, generating more carbon dioxide emissions than oil or gas when burned for energy.
The draft plan aims to set a “gold standard” policy for financial institutions regarding coal. It instructs investors, banks, and insurers on how to handle coal-related financing. The plan directs these institutions to halt new financing for existing or planned coal projects. Additionally, it mandates ending funding to companies building coal infrastructure.
Under the plan, financial institutions would focus on funding the early retirement of coal plants instead of divesting from these assets. The early closure of coal-fired facilities should be paired with financing for clean energy projects to replace the lost coal capacity.
A media release by NGO Urgewald released in May said, “The released data shows that commercial banks provided $470 billion in loans and underwriting to the coal industry between January 2021 and December 2023.”
OECD countries, which include 38 of the world’s largest market-focused democracies, are preparing feedback on the proposal. The list of OECD countries includes Australia, Germany, France, Japan, Switzerland, the UK, and the US.
This proposal will be released for public consultation before its formal adoption ahead of the November UN COP29 climate summit in Azerbaijan.
Although the OECD policy would be non-binding, it aims to establish an international standard for companies’ boards and shareholders.
Quote of the Day
No quotes found.
Newsletter
Related News