Dubious distinction: US banks are leading international funders of coal
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As the international climate talks enter their third day, Friends of the Earth – South Africa, BankTrack, and other environmental groups released a scathing new exposé on the biggest banks funding the global coal industry.
The report, Bankrolling Climate Change, finds that the top four financiers of coal are all Wall Street banks: JPMorgan Chase, Citigroup, Bank of America, and Morgan Stanley. (To make matters worse, each of these “climate killer banks” received taxpayer bailouts, courtesy of you and me.)
The report does a good job in drawing a stark contrast between banks’ climate-friendly rhetoric and the actual impacts of their financing decisions. It even includes an amusing/depressing list of banks’ various green claims; JPMorgan Chase’s line, “Helping the world transition to a low-carbon economy,” is particularly rich, considering that as the biggest bank-roller of coal, it provided $22 billion in financing to the industry since 2005. This financing included more than $564 million to the South African utility Eskom, which is building the notorious Medupi coal plant.
Indeed, Wall Street banks generally have been long on words and short on action when it comes to climate change. In a Huffington Post blog a few years ago, Peggy Drexler of Cornell University shared her reaction to receiving the Little Green Book, “a very creative viral marketing piece from Morgan Stanley that allows friends to pass on 50 things that any household can do to ‘make life greener and help tackle climate change.’” This marketing, she noted, was just months after Morgan Stanley backed a (since-derailed) deal to build 11 pulverized coal plants in Texas. Since 2005, Morgan Stanley has funded King Coal to the tune of $16 billion.
Lately we’ve seen more subtle forms of greenwash. In the last couple of years, financiers such as Bank of America (which has provided more than $16 billion in coal financing) have joined up with their peers to launch industry initiatives such as the Carbon Principles or the Climate Principles. They sound lofty, but both initiatives only commit financiers to evaluate the greenhouse gas footprint of potential coal power deals — they do not require them to curb financing for even the dirtiest or most polluting of the lot. That’s like a diabetic promising to carefully read the labels on ice cream cartons, but allowing themselves to eat as much as they want while touting their healthy new diet. No wonder environmentalists greeted both the Carbon and Climate Principles with a big yawn. (RAN published a good 2-year evaluation of the principles. The upshot: “There is no evidence that the Carbon Principles have stopped, or even slowed, financing to carbon-intensive projects.”)
In my years of doing Wall Street advocacy, I’ve found that most big banks, like Citigroup, are happy to make pledges to increase their support for good stuff like renewables — and that’s fine. Granted, the clean tech sector is getting to be such big business that banks probably couldn’t avoid financing renewables if they tried. But ask Citigroup to scale back its $18 billion in financing for coal, and it balks.
But it’s no time to be timid. The International Energy Association just released a report which says that new fossil fuel infrastructure such as coal plants are the leading culprit responsible for dangerous, irreversible climate change. Banks cannot credibly say they are addressing climate change if they keep funding coal, and our planet can’t afford it if they continue with “lending as usual.” As the report rightly points out, today’s investments are tomorrow’s emissions.