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Surprise jump in global coal-fired capacity; Big ESG funds beating the market

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Surprise jump in global coal-fired capacity; Big ESG funds beating the market

The ESG Insider newsletter compiles news and insights on environmental, social and governance developments driving change in business and investment decisions. Subscribe to our ESG Insider newsletter and listen to the ESG Insider podcast on SoundCloud, Spotify and Apple Podcasts.

Global coal-fired generation capacity increased for the first time since 2015 thanks to a steep increase in coal plant development in China, a new report out this week finds.

The pace of new plant construction in China is far below the boom that took place during 2015 and 2016, but coal-fired development in China has grown "as provinces use coal proposals to stimulate their economies in the wake of the economic slowdown from the COVID-19 pandemic," the report from clean energy nonprofit Global Energy Monitor found.

"The growth has been enabled by the central government, which has loosened restrictions on new coal plant permits and increased lending to grow the national economy, including for coal-intensive megaprojects," the group added.

These findings follow hard on the heels of another report from environmental advocacy organizations that showed fossil fuel financing fell in 2020 as the COVID-19 pandemic halted demand and production. At the same time, overall bank funding of the fossil fuel industry remained higher than in 2016, the year after the 2015 Paris agreement on climate change was signed.

"The overall fossil fuel financing trend of the last five years is still heading definitively in the wrong direction, reinforcing the need for banks to establish policies that lock in the fossil fuel financing declines of 2020, lest they snap back to business-as-usual in 2021," cautioned the report, sponsored by the Rainforest Action Network, BankTrack, the Indigenous Environmental Network, Oil Change International, Reclaim Finance and the Sierra Club.

Podcast

State Street Global Advisors expects a data 'revolution'‬

In the latest "ESG Insider" podcast, we interview the co-heads of asset stewardship at State Street Global Advisors. They tell us about themes the firm focused on in thousands of shareholder engagements in 2020, like COVID-19 response, supply chain resilience and racial and gender diversity. They say that last one is poised for a "revolution" over the next year. They also talk about emerging themes they are engaging with in 2021 proxy season, like the governance of environmental issues.
—Listen on SoundCloud, Spotify and Apple Podcasts.

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Ben Colton and Rob Walker, co-heads of asset stewardship at State Street Global Advisors

Source: State Street Global Advisors

Chart of the Week

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Top Stories

ESG funds beat out S&P 500 in 1st year of COVID-19; how 1 fund shot to the top

S&P Global Market Intelligence analyzed dozens of large ESG exchange-traded funds and mutual funds from March 2020 — the month that the World Health Organization officially declared COVID-19 a pandemic — to March 2021. We found that during that period, the vast majority performed better than the S&P 500. Critics of ESG investing often question whether the strategy can deliver premium returns. But ESG fund managers have said their focus on nontraditional risks led to portfolios of companies that so far have been resilient during the COVID-19 downturn.

Fossil fuel financing falls in 2020 amid COVID-19, environmental groups find

In 2020, 60 of the world's largest commercial and investment banks financed $750.73 billion to the fossil fuel industry, down from $823.68 billion in 2019, but above $709.23 billion in 2016. Investors and regulators have grown increasingly concerned about long-term climate risks, fearing that if industries like coal and gas become obsolete, financial institutions will be left with stranded assets. As a result, lenders have been adopting policies to phase out fossil fuel funding and to bring their lending into line with the Paris agreement.

Pressure to act on carbon emissions looms over growing coal sector in China

Looser restrictions on new permits and increased government lending for large coal projects fueled a boom in Chinese coal projects aimed at stimulating the economy in the wake of the COVID-19 pandemic. Though coal consumption continues to grow in China, industry observers expect a global energy transition will force substantial changes onto the sector in the coming years.

Environmental

Biden's infrastructure plan, new technologies seen as key to energy transition

China ramps up efforts to cut carbon emissions from steel, aluminum industries

Southern expects to achieve net zero 'significantly ahead' of 2050 target

Social

Amazon faces labor backlash in Europe as worker union vote proceeds in US

Investcorp, Xponance join hands to back diverse, woman-owned asset managers

Union miners issue strike notice at Warrior metallurgical coal operations

Governance

G-20 watchdog to recommend roadmap addressing climate-related financial risks

Yellen-led FSOC to focus on climate risks, hedge funds

Major auto, tech companies back moratorium on deep seabed mining

ESG Indices

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