Between 2013 and 2023, more than 200 financial institutions stopped financing coal. It is the most complete example in history of stranded asset theory becoming market reality.
Between 2013 and 2023, more than 200 financial institutions stopped financing coal, starting with the World Bank and spreading to major banks, insurers, and asset managers across Europe and beyond. It is the clearest demonstration that stranded asset theory is not just a forecast; it is a description of something that has already happened.
The Great Coal Exit is sometimes cited as proof that markets can self-correct on climate. The financial case against coal became overwhelming, and mainstream institutions acted on it without a government mandate. The optimistic reading is that the same logic is now playing out, more slowly, across oil and gas.
The pessimistic reading points to what the exit did not achieve. Global coal consumption did not fall off a cliff. Asian state-owned lenders, particularly in China, Japan, and South Korea, continued financing coal infrastructure in developing countries where demand was still growing. Western financial institutions’ exit effectively handed the market to lenders with weaker climate accountability frameworks. The coal exit may have cleaned up Western balance sheets without meaningfully accelerating the global energy transition.
There is also a question about the order of causation. Did financial institutions exit coal because of climate conviction, or because coal was already becoming uneconomic and they were rationally managing their risk? The answer is almost certainly both, in different proportions for different institutions at different times. That ambiguity matters for what lessons can be drawn: if the exit was driven primarily by economics, it tells us less about finance’s capacity for climate leadership than it does about the economics of renewables. The clean energy revolution may have done more to strand coal than any number of divestment pledges.
When the World Bank restricted coal financing in 2013, it did so partly on development economics grounds: in many markets, coal was already becoming more expensive to build than renewables. The decision that started a decade-long industry shift was driven as much by the falling cost of clean energy as by climate conviction. The moral and the financial argument had arrived at the same place at the same time. That alignment, more than any single institution’s values, is what made the exit cascade possible.