Goldman accused of breaching coal pledge with Peabody deal

Goldman Sachs, which gained applause from environmentalists for its 2019 pledge to curb fossil gas financing, is beneath fireplace over a $150mn mortgage final week to Peabody Vitality, the world’s greatest 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 paradox of Goldman’s preliminary pledge to section out financing for thermal coal mining corporations, environmentalists mentioned. In 2019, the financial institution mentioned it could solely assist corporations shifting away from coal at an inexpensive tempo.

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

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

As the only financial institution on the Peabody deal, Goldman “doesn’t appear 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 could section out thermal coal financing within the EU and OECD international locations by 2030. A world section out of coal can be completed by 2040, HSBC mentioned.

For Goldman, “the principle concern 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 Mates of the Earth. The financial institution has wriggle room “open to inner interpretation by the financial institution, which makes it tough to show a transparent breach of the coverage,” he mentioned.

Peabody mentioned coal by-product 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.

International banks have come beneath rising scrutiny for his or her enterprise offers with fossil gas corporations — and shareholders have continued to ramp up strain. Citigroup final week misplaced a request on the Securities and Change 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 needs to be all of the proof we want that Wall Road banks can’t be left to their very own gadgets 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