Asset manager BlackRock joins plans with other financial institutions, including Citigroup Inc., HSBC Holdings Plc, and the Asian Development Bank, to hasten the closure of coal-fired power stations throughout Asia. The plan aims to support the eventual phasing out of coal-powered stations.

The initiative has evolved due to investor pressure on commercial and development banks to cease the financing of new and existing power plants in order to meet key climate targets.

Donald Kanak, chairman of Prudential Insurance Growth Markets, who came up with the idea, told Reuters: “If you can come up with an orderly way to replace those plants sooner and retire them sooner, but not overnight, that opens up a more predictable, massively bigger space for renewables”.

BlackRock has placed sustainability as central to its agenda over the past five years, believing that sustainability will act as a new standard for investing. This announcement is indicative of this move, with the proposals, led by the Asian Development Bank and Prudential, involving the purchase of coal plants throughout developing economies within Asia and operating them for as long as 15 years before closing ahead of schedule.

In doing so, the asset managers will be able to run the power plants at a lower cost of capital, generating similar returns to commercial operators over a shorter period, facilitating the plants’ closure at an earlier date.

Disinvestment from coal-powered energy is critical in reducing carbon emissions. This is particularly evident within Asia, where many countries are still relying on coal as their principal energy source. Coal remains a cornerstone of electricity generation in China, India and other Asian nations, accounting for around 75% of global coal demand.

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“The world cannot possibly hit the Paris climate targets unless we accelerate the retirement and replacement of existing coal-fired electricity,” Kanak said in a statement. “This is especially true in Asia, where existing coal fleets are big and young and will otherwise operate for decades.”

Funding for this transition is expected to come from both public and private sources. But for the plan to be successful, it will rely on countries committing to not replacing coal use with other sources of carbon-intensive fossil fuels. The plan aims to permit developing states such as Vietnam, Indonesia, and the Philippines to make ground on achieving key climate goals in the near future, “not deferring the heavy lifting until mid-century”, said Kanak.

The move looks to be part of a greater initiative by commercial and development banks to fund a green transition, moving away from high emitting sources, freeing the space for an upscaling of renewable energy sources.