New Report Finds Asia Pulp and Paper (APP) Lagging on Social Responsibility Commitments; Provides Recommendations for Improvement
On-the-ground interviews with 17 affected Indonesian communities reveal policy implementation problems while hundreds of unresolved land conflicts remain
FOR IMMEDIATE RELEASE
CONTACT: Laurel Sutherlin, 415 246 0161, firstname.lastname@example.org
San Francisco, CA – A field-based survey to investigate Asia Pulp and Paper’s (APP) performance, provide input into an evaluation of APP’s progress on fulfilling its social responsibility commitments, and make recommendations to the company finds little on-the-ground evidence to date that APP is taking sufficient action to resolve land conflict issues.
With the exception of progress in two communities where it is piloting conflict resolution approaches, there has been little change for communities embroiled in land disputes with the company. Hundreds of land conflicts remain and APP has been failing to involve affected communities and other key stakeholders in the identification, analysis and resolution of these conflicts.
The study, which was initiated by a coalition of Indonesian and International NGOs and community-based organizations, conducted interviews with village leaders and community members from 17 communities impacted by APP and its affiliates. Communities were visited in the Indonesian provinces of Riau, Jambi, South Sumatra, West Kalimantan and East Kalimantan between May and September 2014, including visits to three APP concessions where the company has initiated conflict resolution pilot projects.
APP’s 30-year legacy of adverse social and environmental impacts from its widespread deforestation and pulp plantation expansion across Indonesia is well documented. Following decades of public criticism, community opposition and pressure from its customers and investors, in February 2013 APP announced a much-welcomed new Forest Conservation Policy, which sets out the companies commitments to reform its forestry practices and to address its legacy of land grabs and human rights violations, climate pollution, deforestation, and wildlife habitat destruction across its 2.6 million hectares of concessions.
The study is a contribution towards ongoing independent monitoring of the company’s performance. The study was submitted to an evaluation of APP’s progress against its Forest Conservation Policy Commitments being conducted by the Rainforest Alliance.
Commenting on the coalition’s findings, Patrick Anderson from Forest Peoples Programme said:
“APP still has a tremendous amount of work to do before we can say that their commitments are yielding satisfactory remedies to conflicts on the ground. We’re very concerned that at least one of the the two land conflict agreements that have been reached did not follow all the requirements in APP's policy on respecting community rights and that there are many hundreds of conflicts with communities remaining to be resolved. APP is still failing to effectively involve communities and other key stakeholders in developing action plans and efforts to scale up its conflict resolution. If the situation doesn't change, we’re concerned that the company’s efforts will not secure durable and equitable agreements at scale.”
Aidil Fitri, campaign director at Wahana Bumi Hijau stated that “our research on APP’s implementation of its Free, Prior and Informed Consent (FPIC) commitment relating to the new Oki Pulp Mill, one of the world’s largest, finds that the company has not gotten FPIC from at least one rights holding community and that the company has started construction of Oki Pulp Mill before the FPIC process was completed. We see this as a clear violation of FPIC and the company’s own policy.”
“If APP wants to regain the trust and business of customers and investors, it must improve transparency, work more effectively with stakeholders and prove that it has sufficiently implemented its commitments to a point where it can demonstrate widespread and positive impacts on the ground,” said Lafcadio Cortesi of Rainforest Action Network. “Because the company’s implementation is still at an early stage, there is a clear need for continued independent monitoring and verification of the company’s performance. In order for APP to scale up conflict resolution and prevent further deforestation in the remaining natural forests in their concessions, the company will need to give back more of the land it is currently using for pulp wood plantations to meet community livelihood needs and land claims.”
“Our report provides detailed recommendations for how APP can address current problems and how it can ensure that the foundation that it has established leads to positive outcomes for communities and forests and delivers the results it has promised. The study suggests to buyers and others that it’s still too soon to tell whether APP’s promises will become a reality,” Cortesi said.
The full report, available to download here: http://www.ran.org/app_performance_2015, includes a table outlining the research findings from each community, and the executive summary and recommendations, available to download here: http://www.ran.org/app_performance_2015_summary, provides an overview of the full report’s findings and detailed recommendations of improvements APP can make.
For a Bahasa Indonesia translated version of this press release, download one here:
Rainforest Action Network runs hard-hitting campaigns to break North America’s fossil fuels addiction, protect endangered forests and Indigenous rights, and stop destructive investments around the world through education, grassroots organizing, and non-violent direct action. For more information, please visit:www.ran.org
This post is by Ben Collins of RAN and Yann Louvel of BankTrack.
The campaign to stop bank financing of mountaintop removal coal mining is gaining momentum.
For years, RAN and other organizations in the global BankTrack network have urged U.S. and European banks to stop financing the devastation caused by mountaintop removal (MTR) coal mining. BankTrack members have worked closely with advocates from Appalachia — the region hardest hit by MTR — including Paul Corbit Brown and Elise Keaton from Keeper of the Mountains, and Bob Kincaid from Coal River Mountain Watch. Together, they’ve travelled around the U.S. and Europe to speak directly to CEOs and boards of banks at their annual shareholder meetings and urge them to stop bankrolling mountaintop removal coal mining.
This week, we have an opportunity to push France’s biggest bank, Crédit Agricole, to stop profiting from MTR once and for all. At today’s annual shareholder meeting, Paul Corbit Brown and staff from Friends of the Earth France urged the bank’s CEO, Jean-Paul Chifflet, to follow the lead of other banks and stop funding the biggest and most destructive MTR companies.
Public pressure to stop funding MTR started showing results a few years ago. U.S. banks were the first to react in 2008, adopting a mix of enhanced due diligence procedures and financing thresholds for companies that engage in mountaintop removal. But real change started to happen last year, when Wells Fargo in the U.S., and Crédit Agricole and BNP Paribas in France, adopted new policies on MTR. These covered both direct project financing of MTR projects — which is pretty rare — and, more importantly, general corporate financing of coal mining companies active in MTR.
The implications of these new policies are potentially huge: the biggest and most harmful producers of MTR coal, such as Alpha Natural Resources and Arch Coal, raise their funding from general corporate loans from banks or from bonds or shares issued to investors. And these are precisely the transactions that should be excluded by these new policies, which bar financing for companies that are “significant” producers of MTR coal.
But we’ve learned that different banks define "significant" in wildly different ways. BNP Paribas blacklists the main companies active in MTR production, including Alpha and Arch. But Crédit Agricole — while its policy looks similar to BNP’s on paper — excludes only those coal mining companies that produce more than 20% of their coal from MTR. In practice, they aren’t prohibited from doing business with any MTR companies at all!
Crédit Agricole has financed several loan and bond deals for Alpha and Arch — the worst of the worst MTR companies — while BNP Paribas hasn’t done any deals with these two companies since last year. Ironically for Crédit Agricole, financing MTR has not only been bad for the environment and human rights — it’s also been a bad investment. The bank suffered significant financial losses from loans it made to recently-bankrupt MTR miner Trinity Coal.
In contrast to Crédit Agricole, other U.S. and European banks have taken concrete steps away from MTR financing this spring. Last month, JPMorgan Chase published an update of its environmental and social policy framework, stating that they expected to continue defunding companies engaged in mountaintop mining. And in the U.K., Royal Bank of Scotland (RBS) published a mining policy update prohibiting deals with the main MTR producers. Unlike Crédit Agricole’s new policy, these policy changes at JPMorgan Chase and RBS have teeth: both banks will stop financing top MTR producers, including Alpha and Arch.
Today, our allies went straight to Crédit Agricole’s annual shareholder meeting to tell the bank’s CEO and board close its massive MTR loophole, and stop funding Alpha and Arch.
Yann Louvel, Climate and Energy Campaign Coordinator, BankTrack
Ben Collins, Research and Policy Campaigner, Rainforest Action Network
This blog post has been updated.
This month, Rainforest Action Network and three allies testified at Bank of America's annual shareholder meeting, urging them to drop coal, to stop profiting from environmental destruction and human rights abuses. We're posting the statements of our three allies. Add your voice by telling Bank of America to stop funding coal—and come clean on climate change.
My name is Santiago Piñeros. I was born in Bogotá, Colombia, and I work with Pensamiento y Acción Social (Thought and Social Action), an NGO that assists communities affected by large-scale mining in the center of the Cesar region in Colombia. I have had the opportunity to see how Drummond LTD operates in these areas, a multinational company in which Bank of America invests millions of dollars to develop its extractive coal and gas business.
Three towns located in the middle of the Cesar region—El Hatillo, community we assist, Plan Bonito, and Boquerón, communities we follow up—have to be resettled by Drummond, Glencore-Xstrata and a Goldman Sachs mining company. These resettlements were ordered by the Colombian government, due to the high levels of air pollution and dust from the coal mines. These communities should have been relocated two years ago because of the dangers that coal ash poses to people's health, including respiratory diseases, such as lung cancer, skin and ocular diseases. Thus, Drummond is currently co responsible for three involuntary resettlement processes due to air pollution in El Cesar Region.1 These communities must be resettled quickly, and Drummond's investors, including Bank of America, need to make sure this happens.
Drummond directly contaminates groundwater and rivers where these communities make their livelihoods.2 Activities such as fishing, hunting, territorial and cultural relations with the environment have deteriorated and are often no longer possible due to the contamination. For communities that rely on fishing and hunting for survival, the destruction of the environment means the destruction of the community.3 For these facts, the environmental damages in this region become a violation of the human rights of these communities and so creates an obligation for its investors—you—to commit to recognize the value of the human rights of these poor rural communities, communities that are threatened with simply disappearing. Bank of America has an obligation to protect these communities.
Bank of America invests today in a company that does not respect environmental standards. According to the environmental authorities Drummond recently spilled around 1,800 tons of coal into the Caribbean Sea off the coast of Colombia. This disaster happened because Drummond chose not to implement required changes to the system of directly loading coal at port, which would have prevented these accidents.4 Pollution levels at Drummond coal mines exceed the levels permitted by law in Colombia, and they are steadily increasing.5 The pollution is affecting human health. Still, Drummond only responds to sanctions if they impact the company's ability to export coal.
Bank of America finances Drummond's coal operation and so is co responsible for Drummond, a company that operates with no due diligence regarding human, economic and cultural rights. According to the most recent study of the Contraloría General, Drummond's operations, and thus Bank of America's investments, do not guarantee a healthy life and environment, these operations only make a profit from our natural resources.6 Who holds the accounts where these profits are stashed? Bank of America.
Are these environmental and human rights abuses something you recognize? What responsibility do you have for these events? Your money is being used to fund mining operations that do not represent social, environmental and economic benefits for the communities living in the surroundings of the mines. In fact, the levels of unsatisfied basic necessities in these communities increase as sanctions and fines while the resettlements do not seem to advance.
1. Resolution No. 9070 of 2010 and Resolution No. 1525 of 2010 from the Colombian Ministry of Environment, Housing and Development (MAVDT).
2. Contraloría General de la Nación. Minería en Colombia I: Derechos, políticas públicas y gobernanza. // Minería en Colombia II: Institucionalidad y territorio, paradojas y conflictos. 2013.
3. Resolution No. 54 of 2008 from the Defensoría del Pueblo de Colombia.
4. Resolution No. 0123 of 2013 and Resolution No. 001 of 2014 from the National Authority of Environmental Licenses (ANLA).
5. Resolution No. 9070 of 2010 and Resolution No. 1525 of 2010 from the Colombian Ministry of Environment, Housing and Development (MAVDT).
6. Contraloría General de la Nación. Minería en Colombia I: Derechos, políticas públicas y gobernanza. // Minería en Colombia II: Institucionalidad y territorio, paradojas y conflictos. 2013.
This week a double tragedy has struck the coal mining industry.
On Monday night in West Virginia, a coal outburst at a Patriot-operated mine killed two miners. And on Tuesday an explosion and fire at a coal mine in Western Turkey killed at least 245, with hundreds more still missing.
Our hearts and minds are with the miners and their families.
These disasters underscore the horrific cost of “cheap” and dirty energy. Miners’ deaths such as these are preventable. We call on coal companies to immediately improve labor conditions, and on the governments of Turkey and the United States to strengthen their regulatory oversight of the coal industry.
At the same time, here at Rainforest Action Network, we are reflecting on the less noticed human cost of coal. Every year, more than one million people die of the air pollution that comes from burning coal. 150,000 more die from the extreme weather events aggravated by climate change–and coal is the single biggest driver of global warming.
All of this points to an obvious conclusion. We must not continue to make these sacrifices in order to produce energy from such a dirty and unsustainable source. Coal is a dangerous and outdated fuel, and in the 21st century we should not be using it to power our homes, schools, hospitals and businesses. It is past time for us to shift our energy production to clean, safe renewable power.
Last week, Rainforest Action Network and three allies testified at Bank of America's annual shareholder meeting, urging them to drop coal, to stop profiting from environmental destruction and human rights abuses. In the next two weeks, we'll be posting the statements of our three allies. Add your voice by telling Bank of America to stop funding coal -- and come clean on climate change.
My name is Elise Keaton. I am the Executive Director of the Keeper of the Mountains Foundation and I am from southern West Virginia. I currently live in Charleston, West Virginia. I am here today to ask you to please stop financing the destruction of our mountains, our water and my community.
On January 9 of this year, I came home from work, poured a big glass of water from my tap and drank it. As soon as I set my glass down I received a text message from my landlord stating, “Don’t drink the water! There has been a chemical leak!”
Over the next hours, I experienced acute symptoms from exposure to the coal-processing chemical 4-methylcyclohexane methanol (MCHM), including irritated eyes, nose and throat, nausea, and stomach cramps. If the spill had been immediately lethal, I thought, the authorities would have sounded the chemical valley alarms. So I monitored my symptoms and concluded that I did not need to go to the emergency room that night. I figured that the next day, we would know more about what had happened.
What we learned over the next week was that a Freedom Industries facility storing coal-processing chemicals leaked MCHM into the Elk River, contaminating the drinking water for 300,000 households. The first question a thinking human being should ask is, “Why are 300,000 households, spread across nine counties in a rural state like West Virginia on a single water source in the city of Charleston?”
The answer is: their local water sources have already been compromised by the mining industry. Their streams and springs have been destroyed or buried by mountaintop removal. Their wells have been compromised by blasting or polluted by coal slurry injections.
And instead of addressing the sources of this pollution, the political-industrial establishment in West Virginia decided that your quarterly profits were more important than clean water for our communities and they answered that loss of water by extending the municipal water source further and further out into those counties.
Four months later, we still lack access to guaranteed safe drinking water in West Virginia. Our esteemed congresspeople have insisted that they are drinking the water. But no public health official has declared the water safe to drink.
I am 34 years old and I am getting married this summer. I've waited a long time to start my family. Now, I have postponed my plans to have children indefinitely because no one can tell me the impact MCHM may have had on me and my reproductive ability.
I am here today to ask you to please stop financing the destruction of our mountains, our water and my community. The minuscule profits you received as a result of mountaintop removal mining are incomparable to the catastrophic damage caused by the practice. It is killing us.
More than 20 peer-reviewed health studies have shown that living near mountaintop removal sites is deadly for the people of Appalachia. Please stop financing the destruction of our mountains, our water and my community.
I will close with this: when you remove coal by blowing up a mountain to extract it you have destroyed a “water maker” for the equivalent of one hour’s worth of electricity for the United States. Let me repeat that. When you extract coal by mountaintop removal you kill a resource that will make water forever -- for the equivalent of one hour’s worth of energy for the U.S. How is that a good investment?
As shareholders of one of the largest financial institutions in the world, you are savvy investors and business minded individuals. How is destroying the mountains that create clean water for a very small, short term financial benefit a good investment? Please stop financing the destruction of our mountains, our water and our communities. Your profits from mountaintop removal mean death for us.
Stand with Elise and RAN by telling Bank of America to stop funding coal -- and come clean on climate change.
The message below comes to you from Rudi Putra, a longtime ally and hero of RAN’s and winner of the 2014 Goldman Environmental Prize—the world’s most prestigious award for grassroots environmental activism.
My name is Rudi and I feel like the luckiest person alive. I grew up in a place teeming with wild orangutans, elephants, tigers, sunbears and Sumatran rhinos. My family and I lived in balance with the mountains, forests and rivers surrounding us. From an early age, I knew I had to take care of the beauty that surrounded me. But as huge multi-national companies expand their reach and palm plantations spread, I know that I can't protect these pristine places alone.
I have worked much of my life to protect the 6.4 million acres of prime tropical rainforests in the Leuser Ecosystem. I fell in love with the Sumatran rhino, the smallest and the most critically endangered rhino of all—and have spent years tracking, researching and protecting these special creatures from poachers. I have left my home in Indonesia to come to yours to deliver a very important message.
I have witnessed vast areas of forests destroyed to make way for palm oil plantations, forests I knew were the homes of endangered species. I’ve removed traps from the forest corridors used by the last Sumatran elephants and tigers. I have even found animals poisoned, speared, and burned alive by poachers and plantation workers. And still, the plantations keep growing across Aceh, always feeding the demand for Conflict Palm Oil.
It must stop. We must protect the world's rainforests. We must stop powerful and wealthy international corporations from exploiting and destroying irreplaceable Indonesian ecosystems for profit. My community and I work tirelessly to shut down and destroy illegal palm oil plantations inside the federally protected Leuser Ecosystem, using chainsaws and uprooting illegal oil palms. We do this to protect our families from the floods that result from the destruction of the forests on the hillsides that surround our homes. But we can not do this alone. We need your help.
It is with great honor that I am here in the US and receiving the Goldman Prize. But it is an even greater honor to know that YOU will stand with me and hold PepsiCo to account for the impact of its products.
For the rhino’s and our life,
RAN supported Rudi’s work with a small grant through our Protect-an-Acre program, which funds projects led by Indigenous and frontline communities around the world fighting to protect millions of acres of forest and keep millions of tons of CO2 out of the atmosphere, while defending their right to self-determination.
Often referred to as MTR, mountaintop removal is a horrendous practice that destroys mountains, poisons water supplies and hurts communities. That's why more than 19,000 Rainforest Action Members have sent messages to Barclays demanding the drop MTR financing and is one reason protests confronted the banks annual share holder meeting in London this week.
Barclays executives should take a good long look at these photos. Maybe then they'll stop investing in mountain destruction.
MTR uses explosives to literally blow off the tops of mountains and get the coal underneath.
Hundreds of thousands of acres of beautiful mountains and forest are being destroyed in central Appalachia by companies using MTR.
The rubble from mountaintop removal mining is then pushed into valleys where local streams and water sources are contaminated.
Hundreds of families have had their wells destroyed by nearby mining practices. Cancer, birth defects, heart and long disease and shortened life spans plague communities near MTR sites.
The difference between contaminated and clean water can be stark. It is time for Barclays to get on the right side of history and stop financing companies that poison water.
Photos by Paul Corbit Brown.
Tomorrow, I’m visiting Barclays and I need you to back me up.
In 2013 Barclays gave $550 million in financial support, more than any other bank, to companies destroying my home of central Appalachia with mountaintop removal coal mining (MTR).
That's why I've traveled all the way to England to speak at Barclays' annual shareholder meeting. I want to ensure that the bank's leaders and shareholders know about the true scale of destruction caused by MTR.
MTR is destroying everything I love. More than just leveling mountains, it will pollute our water for countless generations. The health of all those around me is already suffering. Cancer, birth defects, lung disease, heart disease, and dramatically shortened life expectancies have sadly become normal in the communities where MTR is practiced.
The coal industry could not do its dirty work without the help of banks like Barclays. We need to make sure the bank and its shareholders hear that no corporation and no individual has the ethical right to profit from the destruction and sickness caused by MTR.
When people like us hold banks responsible for financing destruction, we can make a difference. We've already persuaded JPMorgan Chase, Wells Fargo and BNP Paribas to move away from MTR financing.
Barclays bank's executive team will be under tough scrutiny at their shareholder meeting. If we act in unison today, we can ensure that the message I'm going to deliver to the meeting packs a powerful punch—and demands responsible and ethical action from the bank.
Paul Corbit Brown is president of Keeper of the Mountains, a West Virginia-based foundation that aims to educate and inspire people to work for healthier, more sustainable mountain communities and an end to mountaintop removal. He is a photographer who has worked in more than a dozen countries and exhibited throughout the United States.
This week marks an exciting turning point in the ambitious international effort to eliminate Conflict Palm Oil connected to rainforest destruction, human rights abuses and climate pollution from our food supply. Thanks to the hard work and consumer pressure created by RAN supporters and our allies - that’s you, dear reader - the palm oil industry as a whole is finally on the move. Several of the “Snack Food 20” companies that RAN put on notice a year ago about their Conflict Palm Oil problem, including Mars, Kellogg, and General Mills have recently responded by strengthening their palm oil commitments, policies and sourcing practices.
This is huge.
But PepsiCo - the largest globally distributed snack food company in the world and the most influential of the Snack Food 20 companies yet to take action to address its Conflict Palm Oil problem – remains a major laggard falling further and further behind its peers.
PepsiCo is a global consumer of Conflict Palm Oil for its snack food brands in the US, Mexico, Latin America, Asia and Europe, yet it still has no truly responsible palm oil purchasing policy. This means while PepsiCo consumes more than 450,000 metric tons of palm oil annually, the company cannot ensure its customers that its products do not contain Conflict Palm Oil. Which is why today, PepsiCo is being singled out for its continued use of large quantities of Conflict Palm Oil by a wide range of groups that includes Showtime’s Years of Living Dangerously project, Rainforest Action Network, the global consumer watchdog group SumOfUs.org and the Union of Concerned Scientists.
RAN’s very own Lafcadio Cortesi appears in the premiere episode of Showtime’s dramatic new climate series, where he walks Harrison Ford down the aisle of an American grocery store and explains how Conflict Palm Oil is destroying Indonesia’s forests and peatlands while displacing Indigenous communities. At the end of the second episode of this star studded show, viewers are directed to the Years of Living Dangerously website where PepsiCo is targeted for its outsized role contributing to deforestation. Showtime viewers are invited to call out PepsiCo’s CEO Indra Nooyi to publicly respond to the question: “Deforestation from palm oil is a leading driver of climate change. How can you ensure your customers that your supply chains do not contribute to this ongoing problem?” With this kind of exposure, now is the time for us to raise our voices together and make sure that PepsiCo hears from every one of us.
The global palm oil industry is fast approaching a tipping point and PepsiCo’s global scale and influence gives it a crucial role to play in finally eliminating Conflict Palm Oil from our food supply. We've got PepsiCo’s attention, and we know the company is feeling the heat. Now it is crucial that we increase the pressure to push PepsiCo over the edge to take a stand for the climate, orangutans, the rainforest, and the families who live and work there.
Thank you for your vital support - we cannot win this important, high stakes fight without you.
Key PepsiCo Facts and Statistics:
Annually, PepsiCo uses enough palm oil to fill Pepsi cans that would reach around the earth 4 times.
Annual Revenue: $65.5 billion in 2012 (50% from international)
Chairman and CEO: Indra K. Nooyi
Countries of Operation: PepsiCo is the largest globally distributed snack food company in the world. Sold in over 200 countries; Americas, Europe, Middle East, Asia, and Africa
Biggest use of palm oil: Mexico, 40% of PepsiCo’s palm oil use
Total Global Annual Palm Oil Usage (2013): 457,200 metric tons
Known Palm Oil Suppliers: PepsiCo sources palm oil products originating in SE Asia from Cargill, Wilmar, and AarhusKarlshamn (AAK) and originating from plantations in southeast Mexico (Chiapas, Tabasco, Veracruz) and Guatemala from Oleofinos of Mexico.
Regions of Impact: The top 3 countries where PepsiCo sources its palm oil from are Indonesia, Malaysia and Mexico.
Best Known PepsiCo Brands using palm oil globally: Frito-Lay including Lay’s and Cheetos, Chitato, Qtela and Gamesa.
Best Known PepsiCo products in the US using palm oil: Quakers Big Chewy Granola Bar, Quaker Oats Granola Bites, Quaker Oats Banana Nut Bread, Frito Lay Munchies Flaming Hot, Frito Lays Grandma’s Homestyle Chocolate Chip Cookies. Facts got you ticked off? Make sure you take action here.
For the first time since we began publishing coal finance report cards five years ago, we have an encouraging trend to report: Major banks have begun making noise about the growing financial risk associated with climate change—and specifically associated with coal, the top global contributor to carbon pollution.
On top of that, major banks have begun to cut ties with the biggest mountaintop removal (MTR) coal companies. This progress has exposed a growing gap between banks that are still sinking billions into coal, and those that are cutting ties with the worst-of-the-worst in the coal industry.
Today, RAN, the Sierra Club, and BankTrack released our 2014 Coal Finance Report Card, “Extreme Investments, Extreme Consequences,” which grades U.S. banks on their performance and policies related to coal-fired power and mountaintop removal coal mining. We also uncovered the top financiers of contentious coal export schemes like those in the Pacific Northwest and coal trains that transport dusty coal across the United States.
All told, banks sank over $31 billion into the worst companies in the coal industry last year, with $6.5 billion coming from Citigroup, the top funder of coal-fired power. However, JPMorgan Chase and Wells Fargo began to phase out financing for MTR, earning our first ever “B” grades, and marking a positive trend away from the extreme mining practice.
Meanwhile, UK-based Barclays increased its exposure to MTR, financing $550 million for mountaintop removal coal companies last year, more than any other bank.
Environmental damage from mining, transporting, and burning coal—including health hazards like air pollution and water contamination from spills—doesn’t just harm communities and the environment, it costs banks money. In the report card, we highlight examples of this in case studies about the rising cost of clean-up for water contamination at mine sites, increases in coal company bankruptcies, and money-losing coal-fired power plants.
The report comes on the heels of analyst publications from Goldman Sachs, HSBC and Citigroup last year, each of which challenged the case for continued investment in the coal industry. These and other banks have acknowledged that power plant regulations, a potential price on carbon, and competition from renewable energy sources could “strand” assets such as coal mining, transport, and power generation facilities. With billions of dollars in loans on the line, it’s not a question of if climate risk will translate into financial risk, but when.
Ironically, these very same banks maintain deep financial ties to the riskiest and most environmentally destructive companies in the U.S. coal industry. As credit ratings for some coal mining companies sank farther below investment grade last year, banks continued to place bets on risky loans to the sector.
The report card warns banks that before the carbon bubble bursts onto their balance sheets, it will irreversibly destabilize the climate. So while we are happy to report that a few banks took the first steps to cut off financing to the worst-of-the-worst of the coal industry, the banking industry as a whole must now cut its losses and forge a path away from coal, before it’s too late for both them and us.