The Push for Banks to Cease Financing of Coal in Steel Production

Advocates for sustainable finance are urging five of the six largest U.S. banks to cease financing metallurgical coal, which is a high-emission energy source used in the steelmaking process. In a recent letter addressing the banks, climate groups are calling on them to commit to ending all dedicated financial services for the development and expansion of metallurgical coal projects and related infrastructure.

Metallurgical coal contains a higher amount of carbon, in addition to ash and moisture, compared to thermal coal, which is more commonly used for power generation. The climate groups argue that banks need to include metallurgical coal in their phase-out plans and increase lending to key sectors that support the steel industry’s transition.

The letter, endorsed by 67 climate organizations globally, including BankTrack, the Rainforest Action Network, and the Sierra Club, emphasizes the urgency to identify alternative energy sources for steelmaking and power generation, and calls for all coal to remain in the ground. It was sent to 50 large financial institutions worldwide.

The U.S.-based banks targeted by the letter are Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, and Morgan Stanley. Collectively, these banks provided a total of $29.6 billion to finance metallurgical coal projects since 2016, according to the correspondence. While BofA, Citigroup, and Morgan Stanley declined to provide comments, Goldman Sachs and JPMorgan did not respond to requests for comment.

In response to the issue, Citi has committed to achieving a score of zero under the Sustainable STEEL Principles, a reporting framework developed by the Rocky Mountain Institute, and has pledged to reduce 90% of emissions from thermal coal mining by 2030. JPMorgan Chase has set a target to decrease 30% of its emissions linked to the steel industry by 2030. Meanwhile, BofA, Goldman Sachs, and Morgan Stanley have yet to establish 2030 targets to reduce their portfolio emissions from the steel industry.

Ariana Criste, who leads the steel campaign at Industrious Labs, emphasized in an interview that the financial industry has yet to fully address the issue of metallurgical coal. Criste highlighted that banks’ continued financing of the steel industry’s reliance on this outdated fossil fuel will hinder the achievement of a green steel future.

In addition to targeting banks, advocates are also calling on the steel industry to decarbonize or phase out steel production to support efforts to mitigate the worst effects of climate change. Over the past decade, climate activists have consistently pressured banks and other companies to cease funding industries emitting greenhouse gases and provide more transparency about their carbon footprints.