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CIMB is risking its sustainability credentials by funding a coal giant.

Take action

CIMB is hosting The Cooler Earth Sustainability Summit 2022 while funding Adaro, a coal company whose operations are leading to the production of emissions we cannot afford. Assuming all Adaro’s thermal coal reserves are combusted and all metallurgical coal reserves are used in the steel industry, the potential emissions of Adaro’s coal reserves is 2.18 GtCO2-e, almost equivalent to the annual emissions of India^[1]Potential emissions from coal use are estimated using Australian National Greenhouse Accounts Factors .

If CIMB truly supports a “just transition” and a safer planet as the conference suggests, the bank must rule out funding to Adaro.

Key points

Adaro’s business as a thermal coal miner with little indication of a plan to transition threatens climate goals
Funding Adaro would be against CIMB’s own climate policy
CIMB is trying to be a climate leader by organising The Cooler Earth Sustainability Summit, but aligning with Adaro threatens this reputation

Take action:

Use this form to email or tweet to CIMB. Tell the bank that it must rule out further financing of Indonesian coal giant Adaro!

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I understand that CIMB has previously provided finance for Adaro Energy Indonesia (Adaro), one of the coal giants in Indonesia. Such finance threatens your reputation as a sustainability leader, and raises questions about whether events such as the Cooler Earth summit are merely greenwash.

Despite evidence from the International Energy Agency (IEA) [1] and other experts[2] that coal must decline and eventually be phased-out to meet the climate goal, Adaro insists [3] that coal demand remains significant until at least 2050 and that the fundamentals for coal will be intact in the long run. Two global banks have recently recognised problems with financing Adaro, both DBS bank and Standard Chartered Bank have stated they will not provide further finance to the company.

I am writing to ask for your confirmation that CIMB will not participate in any further financing for Adaro and its subsidiaries.

CIMB’s participation in any of Adaro’s debt raising directly undermines CIMB’s policy by providing financing to a company that is still exploring new coal with no plans to stop extracting coal. CIMB’s Sustainable Finance Framework states that it will not engage with clients involved in coal, specifically in “project financing and any forms of asset-level or general corporate financing as well as capital raising that are specified as being for greenfield thermal coal mines.”

Contrary to this policy, Adaro was exploring for new coal in an undeveloped greenfield acreage in East Kalimantan through its subsidiary, as stated in its 2021 Annual Report. These greenfield mining areas cover around 34,000 hectares with an estimated coal resource of 3.3 billion tonnes, “making it one of the largest undeveloped deposits of low calorific value coal” stated Adaro in the Report.

IEA has made it clear that a new coal mine is not needed to achieve net-zero by 2050 [4]. Adaro’s exploration for new coal is a business plan consistent with the failure of the Paris Agreement.

Supporting Adaro means you risk being associated with Adaro’s coal activities that threaten our livable future and have reportedly deprived villagers of their livelihood[5]. Coal - which, according to Adaro, remains in the DNA of the company - is the dirtiest fossil fuel and responsible for 41% of global carbon emissions[6].

CIMB could be a sustainability leader in Asia. I ask your confirmation that CIMB will not provide any further financing to Adaro, thereby compelling Adaro to reduce and ultimately cut its dependency on coal, and develop clear and measurable plans for phasing out coal in line with the Paris climate goals.

[1] https://www.iea.org/reports/net-zero-by-2050
[2] https://climateanalytics.org/briefings/coal-phase-out/
[3] https://www.adaro.com/files/news/berkas_eng/2117/ADRO%2020220405%20Laporan%20Tahunan%20AEI%2021.pdf, https://www.adaro.com/files/news/berkas_eng/2132/AE%20Presentation%20May%202022.pdf  
[4]  https://www.iea.org/reports/net-zero-by-2050 
[5] https://projectmultatuli.org/en/for-the-sake-of-coal-life-disappears-from-wonorejo-village/ 
[6] https://www.carbonbrief.org/global-co2-emissions-have-been-flat-for-a-decade-new-data-reveals/

Yours sincerely,

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TOOK ACTION: Adaro - CIMB cooler earth sustainability summit - Sep 2022

Adaro’s business plan threatens climate goals and people’s lives

Image: A woman holds an umbrella as she waits with her family to be evacuated by the rescue team on a bamboo raft in front of her flooded house in South Kalimantan, Indonesia. The flooding has been linked to massive land clearing for palm oil plantations and coal mining activities in South Kalimantan. © Putra / Greenpeace.

Adaro Energy Indonesia (Adaro) is a pure-play coal company without any plans to reduce coal reliance anytime soon. In 2021, it derived 96% of its revenue from coal while the remaining revenue was derived from coal logistics and services. Despite evidence from the International Energy Agency (IEA) and other experts that the decline and eventual phase-out of coal by 2050 are necessary to meet climate goals and a recent IEA study which cast doubt on the long-term prospects of Indonesian coal exports, Adaro insists that global coal demand will sustain in the long term at least until 2050.

Adaro’s mining activities are linked with deadly flooding in Kalimantan. In January 2021, South Kalimantan region of Indonesia was hit by a massive flood that killed 21 people, displaced 63,000 people from their homes and affected at least 342,987 people. Apart from extreme rainfall, the floods have been linked with degraded land in the water catchment area. Adaro operates one of the largest coal mines in South Kalimantan and is one of the mining companies that caused the degradation of the Barito river’s water catchment areas. According to the Indonesian Forum for the Environment (WALHI), there are nine flooded areas around Adaro’s concession.

Since 2006, CIMB has provided USD$250 million to Adaro and its subsidiaries. Last year, CIMB was part of a credit facility agreement of US$400 million to Adaro’s mines.

Recently DBS Bank and Standard Chartered Bank both advised that they would no longer be funding Adaro.

CIMB is failing its coal policy

In December 2020, CIMB committed to phasing out coal from its portfolio by 2040 and will prohibit asset-level or general corporate financing for new thermal coal mines as well as expansions. Despite this commitment, CIMB still took part in a US$400 million loan syndication to Adaro’s mines in April 2021.

CIMB’s latest coal policy in 2022 states that it will not engage with clients involved in coal, specifically in “project financing and any forms of asset-level or general corporate financing as well as capital raising that are specified as being for greenfield thermal coal mines.”

According to Adaro’s 2021 Annual Report, it was exploring new coal in an undeveloped greenfield acreage in East Kalimantan through its subsidiary. These greenfield mining areas cover around 34,000 hectares with estimated coal resources of 3.3 billion tonnes, making the areas the largest undeveloped deposits of low calorific value coal.

Despite CIMB’s restriction on greenfield thermal coal mines, the bank has not made any commitment to stop providing support to Adaro.

CIMB shouldn’t be supporting an industry that is threatening our livable future. If CIMB really understands that significant, systemic and business changes are urgently needed for a livable future, as it claims in the materials for its Cooler Earth Sustainability Summit, then CIMB must stop funding and supporting Adaro, a company that is exploring new coal without any plans to stop extracting coal.

Tell CIMB that it must rule out further financing of Adaro.

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References[+]

References
↑1	Potential emissions from coal use are estimated using Australian National Greenhouse Accounts Factors