Five months after BlackRock Inc. made the milestone announcement that it would be divesting from certain thermal coal companies, a movement that is making it harder for coal companies to tap into capital and other financial services has only intensified as a global pandemic further squeezes the industry.

BlackRock, the world's largest asset manager, announced in January that by the middle of 2020, it would exit certain investments in companies that depend on thermal coal for more than 25% of their revenues. While the asset manager remains exposed to the coal sector, it has already sold part of its ownership in coal companies that meet criteria it announced at the beginning of the year.

"BlackRock's initial divestment from coal sent a powerful signal around the world that the coal industry is in an irreversible decline," Sierra Club campaign representative Ben Cushing said in a recent interview.

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U.S. coal companies are indeed struggling to find a place in a world where investors increasingly focus on corporate responsibility, but several are trying. Either by focusing attention on metallurgical coal used in steelmaking or by highlighting their practices compared to industry peers, several have tried to distinguish themselves on environmental, social and governance investment merits.

"We believe that coal will continue to remain a part of the global energy mix into the future, and in a competitive market, the most innovative and responsible operators will prevail," Jacquie Fidler, Consol Energy Inc. director of environmental and regulatory affairs, said earlier this year. "Coal's role in expanding access to energy is undeniable, especially in developing economies where coal-fired generation is growing — this 'social' component of 'ESG' cannot be overlooked."

BlackRock's policy allows for continued investment in metallurgical coal businesses, and the asset manager maintains significant holdings in U.S. coal companies focused on the commodity such as Warrior Met Coal Inc. and Contura Energy Inc. It also still holds interests in companies such as Arch Resources Inc. and Peabody Energy Corp. that produce substantial amounts of both metallurgical and thermal coal.

Other big players in the financial sector have also drawn further from coal since BlackRock's announcement. In February, JPMorgan Chase & Co. said it would no longer provide lending, capital markets or advisory services to companies that derive the majority of their revenues from extracting coal. BNP Paribas SA expanded its target to end relationships with customers that use coal to generate electricity by the end of 2030 to all Organization for Economic Cooperation and Development countries in early May. When U.S. power producers talk about coal with investors, it is typically about their exit plans.

BlackRock, which had $6.46 trillion in assets under management as of March 31, now has "no exposure" to sectors with heightened ESG risk in its actively managed public debt or equity portfolios where it has investment discretion, according to a May sustainability update. That includes "controversial weapons systems manufacturers" and companies that generate more than 25% of their revenues from thermal coal production.

"At the center of these commitments is our investment view that sustainability-integrated portfolios can provide clients better long-term risk-adjusted returns," the update said.

However, despite the ubiquity of BlackRock's investments, environmental and human rights organization Urgewald E.V. estimated shortly after the new policy was rolled out that it would affect less than 20% of the coal industry. Many coal producers do not meet BlackRock's screening criteria because coal is a relatively small portion of their broader revenue stream, even if they produce a significant amount of the world's coal supply.

Urgewald was also critical that the policy covered producers of coal but not coal consumers.

Many large diversified miners are shifting away from thermal coal production. After a recent divestment of its coal assets, Rio Tinto now touts itself as the only major diversified miner that does not produce oil, coal or gas. The company also largely derives the power it consumes from renewable energy resources.

"We believe that fossil fuels will increasingly be substituted for renewable energy as the world transitions to a low-carbon economy," said Peter Toth, Rio Tinto's global head of corporate development and head of strategy, at the company's April 20 sustainability seminar.

Research from BlackRock and third parties demonstrated sustainable indexes have typically outperformed parent benchmarks through the first quarter of the year, according to the May update. ESG scores of companies with sectors differentiated "between leaders and laggards across global markets," including the energy sector, the investment firm said.

"This is a trend that we expect to see through the current pandemic, the recovery, and long after," BlackRock's update said.

Moody's has repeatedly warned that the U.S. coal sector's outlook remains negative and that ESG factors are a driving force keeping a lid on the industry's growth in the future. The pandemic has only accelerated the coal sector's demise.

"There are some commentators that were saying, you know, ESG will be something that that gets put on the back burner to some extent," Moody's lead coal analyst Benjamin Nelson said. "In coal, I think it further intensifies the concern, as investors have dumped coal assets."

Cushing said he expects the financial sector to continue to make announcements distancing itself from coal, particularly as it becomes more evident that fossil fuels struggle to remain profitable in the face of competition from renewable energy resources.

"I think that the current crisis has peeled back the curtain a bit on the finances of many of these fossil fuel producers," Cushing said. "I think you're beginning to see some financial institutions waking up to that and understanding that this is not an industry that is in good financial shape or has a strong financial outlook for the years and decades to come."

BlackRock did not directly respond to a request for comment. A spokesperson pointed to the company's May sustainability update in response to questions about its progress in divesting from coal companies.