UK’s development bank to cut foreign fossil fuel support

The UK government’s overseas development bank has promised to invest only in companies that align with the Paris Climate Agreement in reaction to calls to end fossil fuel financing.

The CDC Group says its new climate strategy will channel 30% of its spending towards climate finance in 2021 and end its support for the most-polluting fossil fuel projects. The publicly owned investor will end financing for coal mining and coal-fired power plants (including dual-power plants), upstream oil and gas exploration and production, as well as investments for new or existing power plants and refineries that use coal or heavy oil.

The Bank noted that in the few cases where it might make a gas-related investment, it would only be to support a country in its transition to a net zero carbon future, in accordance with achieving its Paris Agreement goals.

CDC has already committed more than $1bn of climate finance over the last three years. The new approach will see a climate lens placed over every sector in which CDC invests to ensure that the companies it supports can reduce emissions and adapt to become more resilient to climate shocks. The company will also place a special focus on a just transition to make sure the new investment strategy is socially inclusive of workers’ rights, women and communities and creates new jobs and skills.

The CDC’s Chief Executive Nick O’Donohoe says: ‘Climate change remains the single largest challenge faced by the planet and is the defining issue for our generation and for those that will follow. That is why we have launched this ground- breaking climate change strategy that will shape every single investment decision we make moving forward.’