FirstRand bank to end loans to new coal mines, plants in 2026

The bank’s updated energy and fossil fuel policy sets 2026 as the year it will cease to fund new coal-related projects. (Image courtesy of FirstRand | YouTube.)

South African bank FirstRand (JSE: FSR) became on Wednesday the latest financial institution to announce the end of loans for new coal-fired power stations and coal mines, simultaneously lowering the cap on its coal exposure. 

The bank’s updated energy and fossil fuel policy sets 2026 as the year it will cease to fund new coal-related projects, making FirstRand one of only two big South African lenders to close the door on funding for such activities altogether. 

“It is the long-term ambition of FirstRand to be net zero by 2050,” the bank said in the updated document. The bank will also reduce its short- and medium-term limits on its overall coal exposure, it noted.

“The pathway assumes the end of coal as the core energy source of South Africa between 2042 and 2049”

FirstRand Ltd.

FirstRand, owner of retail lender FNB and Rand Merchant Bank, sees its transition pathway assuming a gradual reduction in coal production and ending use from 2025 to 2030 as Eskom Holdings SOC Ltd. decommissions five of its coal-fired power stations and as global demand for exports of the fuel declines, it said. 

“The pathway assumes the end of coal as the core energy source of South Africa between 2042 and 2049,” FirstRand said.

Banks across the globe are bowing to pressure from shareholders and lobby groups to avoid coal investments. Australian lenders have recently made headlines with Macquarie Group, Australia and New Zealand Banking Group (ANZ Bank), Commonwealth Bank of Australia and Westpac recently signaling their intention to stop coal financing. 

Other South African banks such as Investec and Standard Bank Group are also pursuing plans that encourage clients to opt for greener technologies.

The growing trend has left miners scrambling to source alternative funds for projects. 

Yet, fossil fuel companies are worth $18 trillion in listed equity, making up a quarter of the total value of global equity markets, according to Carbon Tracker’s most recent estimate. They account for $8 trillion in corporate bonds, more than half the non-financial corporate bond market. 

Unlisted debt — mostly owed to banks — could be four times greater, reaching almost $32 trillion, the London-based think tank suggests.