Banks across the world have come under pressure from not just climate activists but also many investors and regulators to ease the transition towards a low-carbon economy.
Financing for oil, gas and coal projects has come under particular scrutiny as climate scientists step up calls to reduce the world’s deep reliance on fossil fuels to avert disastrous warming.
Presenting its sustainability targets a week before the unveiling of a new four-year plan, UniCredit also said it would raise its exposure to the renewable energy sector by a quarter to more than nine billion euros ($10bn) by 2023.
Banks with assets equivalent to one-third of the global industry in September adopted new United Nations-backed “responsible banking” principles to fight climate change by shifting their loan books away from carbon.
UniCredit, Italy’s biggest bank by assets, was not among that group at the time but is now close to joining.
France’s BNP Paribas last week announced it would completely exit financing related to thermal coal by 2030 in the European Union and by 2040 worldwide.
Thermal coal is the type of coal used to generate electricity, whereas coking coal is burned to make steel.
Speaking at a press briefing where UniCredit handed out reusable metal bottles sporting the slogan “Do the right thing!”, CEO Jean Pierre Mustier also said the bank would remove all single-use plastics from its buildings by 2023.
By the same date, UniCredit also plans to derive 100 percent of the electricity for its offices in Italy, Germany and Austria from renewable sources – up from 78 percent last year.
UniCredit said new projects in thermal coal mining and coal-fired power generation would be off-limits, setting strict commitments to reduce reliance on coal for customers of its corporate financing business.
The measures take effect immediately but some existing financing deals will take until 2023 to run off, the bank said.
The bank’s new oil and gas policy also bans the financing of new projects in Arctic oil and offshore Arctic gas. It also stops funding for shale oil and gas, as well as related fracking, tar sands oil, and deep-sea oil and gas.
It also limits the financing for clients who are active in these areas.
“Of course, if oil companies were to disappear right now we would have a problem,” Mustier said, referring to massive global energy demand. But he added that banks must now “finance the transition”.
Without explicitly naming Italy’s biggest oil and gas group, Mustier suggested that UniCredit had held talks with Eni on how to manage the transition and said the bank could, for example, support projects to derive energy from waste.
Meanwhile, Italy’s Enel aims to spend more to fund growth in clean energy and networks as it speeds up plans to reduce its carbon footprint and meet growing demand for electricity, Europe’s biggest utility said on Tuesday.
In its new business plan, Enel said it would spend 28.7 billion euros ($32bn) through 2022 as it looks to install 4,700 megawatts of new green energy a year and cut its coal-fired electricity production capacity by 61 percent.