Many of America’s largest banks have clear policies on the need to address climate change.
However, while many of those institutions are investing heavily in renewables and efficiency, they’re also helping finance coal plants and destructive mountaintop removal operations.
Investment banks have played a central role in driving growth of clean energy over the last decade. But can these banks claim that they are engaging in true “environmental finance” if they are handing out money to an industry that is one of the greatest threats to our climate?
A new report card issued today by the Sierra Club and the Rainforest Action Network ranks the nation’s leading banks on their exposure to the coal industry. The results aren’t good. Almost all the grades are D’s, and no bank on the list gets better than a C- on financing coal projects.
The graders sifted through environmental finance policies, social responsibility reports, and annual reports to get a solid picture of how each bank prioritizes sustainability and integrates coal in its portfolio. After evaluating the banks on their exposure to coal, the graders gave each institution an opportunity to provide more information. If appropriate, the grades were adjusted accordingly. But those adjustments didn’t dramatically improve any of the evaluations:
The policies reviewed in this report reveal that there is no lack of words spent by banks on how to deal with the climate and environmental health risks of the coal industry; what is lacking are serious policies that are implemented in earnest. Continuing to be a major financier of coal is not going to save banks’ hard-won reputations, support their long-term financial stability or protect our climate.
So how do the portfolios of the nation’s top five financial backers of coal — the so-called “filthy five” — match up with their stated positions on climate change? We’ve compared them below by matching each bank’s public statement on climate change with the public information gathered in the report card.
- Bank of America climate statement: “Global climate change represents one of the greatest challenges faced by our society. How we address this challenge today will have important impacts on current and future generations.”
- Bank of America coal portfolio: Between January of 2010 and March of 2012, the institution brokered 44 transactions for coal-burning power plants or mountaintop removal operations. Bank of America is an underwriter for more than 43 percent of mountaintop removal coal mined in Appalachia.
- JP Morgan Chase climate statement: “As a global company, JPMorgan Chase recognizes the international consensus to reduce greenhouse gas emissions and is proud to be a major participant in the global market for emission reductions established by the Kyoto Protocol.”
- JP Morgan Chase coal portfolio: Between January of 2010 and March of 2012, the institution brokered 42 transactions in the coal industry. The organization has substantially reduced activity in American mountaintop removal; however, the company is the leading underwriter for the global coal industry.
- Citibank climate statement: “Climate change poses significant risks to the global economy that require urgent action. The burning of fossil fuels to meet energy needs, loss of forests, and other activities are increasing the concentration of greenhouse gases (GHG) in the atmosphere and contributing to climate change.”
- Citibank coal portfolio: Between January of 2010 and March of 2012, Citi brokered 40 transactions in the coal sector. Citi has recognized the “adverse environmental impacts” of mountaintop removal, but still remains a top financier of projects. The company has also implemented “carbon principles” to evaluate coal projects; however, the graders conclude there is no evidence that these principles have stopped or slowed the bank’s financial activity for carbon-intensive projects.
- Morgan Stanley climate statement: “Morgan Stanley recognizes that the climate is changing and that emissions from human activity are one of the leading factors requiring immediate attention. We are aware of the benefits of reducing greenhouse gas emissions.”
- Morgan Stanley coal portfolio: Between January of 2010 and March of 2012, Morgan Stanley brokered 33 transactions in the coal sector. The institution created a new internal standard for evaluating mountaintop removal projects, causing it to drop six transactions in recent years. Morgan Stanley has also supported a price on carbon. However, it still remains a very active investor in both coal generation and mountaintop removal.
- Wells Fargo climate statement (pdf): “Environmental finance represents an opportunity for the entire global economy – an opportunity to stimulate growth, employ eager minds and address some of the world’s most pressing problems.
- Wells Fargo coal portfolio: Between January of 2010 and March of 2012, Wells Fargo brokered 26 transactions in the coal sector. The institution said in a recent report that it would “disassociate itself” from mountaintop removal mining; however, the report card points out that Wells Fargo has increased its exposure to mining companies in this sector by 35% in the last year.
This is a crude comparison. But the trend is clear. Even while America’s largest banks make bold statements about the need to reduce greenhouse gas emissions, they are still heavily engaged in the climate-polluting coal sector.