Goldman accused of breaching coal pledge with Peabody deal

Goldman Sachs, which received applause from environmentalists for its 2019 pledge to curb fossil gas financing, is below fireplace over a $150mn mortgage final week to Peabody Vitality, the world’s largest non-public sector coal producer.

The deal, organized to shore up Peabody’s derivatives positions amid the market turbulence triggered by Russia’s invasion of Ukraine, highlighted the anomaly of Goldman’s preliminary pledge to part out financing for thermal coal mining corporations, environmentalists mentioned. In 2019, the financial institution mentioned it might solely help corporations shifting away from coal at an affordable tempo.

Goldman’s 2019 coal pledge was thought-about the strongest adopted by any large US financial institution, mentioned the Rainforest Motion Community, a San Francisco-based environmental non-profit.

However now the Peabody deal “demonstrates how obscure and subsequently non-committal the [bank’s] coverage is,” mentioned Alison Kirsch, a coverage and analysis supervisor at RAN.

As the only real financial institution on the Peabody deal, Goldman “doesn’t seem like [it] is getting out of coal,” she mentioned.

Goldman Sachs declined to remark.

Since 2019, different banks have gone additional in limiting offers with coal corporations. In December, HSBC mentioned it might part out thermal coal financing within the EU and OECD international locations by 2030. A worldwide part out of coal can be completed by 2040, HSBC mentioned.

For Goldman, “the primary problem right here is how obscure coal coverage is,” mentioned Yann Louvel, a senior coverage analyst at Reclaim Finance, a non-profit group affiliated with the Buddies of the Earth. The financial institution has wriggle room “open to inside interpretation by the financial institution, which makes it tough to show a transparent breach of the coverage,” he mentioned.

Peabody mentioned coal spinoff contracts it entered into in 2021 have been hammered by the surge in coal costs and that the corporate was hit with a $534mn margin name, prompting the necessity for the Goldman mortgage. Shares in Peabody, which owns stakes in 17 energetic coal mines within the US and Australia, are up 500 per cent from a yr in the past.

World banks have come below growing scrutiny for his or her enterprise offers with fossil gas corporations — and shareholders have continued to ramp up stress. Citigroup final week misplaced a request on the Securities and Alternate Fee to dam a shareholder proposal demanding the financial institution halt lending and underwriting for brand new fossil gas provides.

“A $150mn mortgage to a coal firm that doesn’t violate Goldman’s supposedly bold local weather coverage ought to be all of the proof we want that Wall Road banks can’t be left to their very own units to repair their local weather downside,” mentioned Adele Shraiman, the marketing campaign consultant for the Sierra Membership’s Fossil-Free Finance marketing campaign.

Extra reporting from Joshua Franklin and Eric Platt