A UK-based hedge fund billionaire is urging large central banks to end their funding of coal-fired power plant projects. Chris Hohn, founder of TCI Fund Management and a champion of causes to combat climate change, expressed his concerns in letters published March 1 to the Bank of England, the European Central Bank, Barclays, HSBC, and Standard Chartered.
Hohn, through his Children’s Investment Fund Foundation (CIFF) and along with CIFF chairman Graeme Sweeney, sent a sixth letter to the Network for Greening the Financial System (NGFS), a group of regulators that supports heightened awareness of climate change risks. The NGFS includes countries with large investments in coal-fired power generation, including Japan, China, South Korea, and Australia. Hohn and Sweeney in their letter to NGFS said the CIFF has supported $6 billion in grants for projects to tackle climate change.
Sweeney spent 35 years at Royal Dutch Shell and headed the company’s global renewable business. The CIFF, founded by Hohn in 2003, focuses on improving the lives of children who live in poverty in developing countries.
“Coal is the single largest source of greenhouse gas emissions globally and the risks of its continued use in the power sector are not being adequately addressed by regulators and the financial system,” Hohn said in a statement on the CIFF website. “Having worked to phase out coal for over 10 years, CIFF is now calling on regulators and banks to correctly account for and disclose the risks coal poses to humans, the environment and to bank balance sheets.”
Hohn and other activist investors have in recent years stepped up pressure on banks to limit or eliminate their financial support of power generation projects that they say contribute to climate change. Investors have become increasingly concerned about risks to their balance sheets due to the devaluation of coal, oil, and natural gas assets.
The Institute for Energy Economics and Financial Analysis says more than 100 financial institutions worldwide have restricted their funding of thermal coal projects.
Hohn in December 2019 threatened to vote against bank directors who failed to take action to reduce their exposure to projects with carbon emissions. In his recent letter to Mark Carney, governor of the Bank of England, he said UK banks were “highly likely” to sustain losses on coal projects as the cost of renewable power continues to fall, and regulations on carbon emissions and air pollution are made stricter. Hohn wants to step up the application of a supervisory requirement known as “risk-weighting” of coal loans, which would make financing of coal plants more difficult for banks. He also has asked government regulators to force banks to publicly disclose their exposure to coal.
In his letters to HSBC, Barclays, and Standard Chartered, Hohn asked the banks to disclose any coal exposure on their balance sheets, and wants that financing classified as high-risk loans.
—Darrell Proctor is a POWER associate editor (@DarrellProctor1, @POWERmagazine).