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
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.
|Bloomberg’s “World’s Greenest Banks”|
|Name||Bloomberg rating (2012)||Climate Killer Banks rating (2011)|
|JP Morgan Chase||3||1|
|Mitsubishi UFJ Finance Group||4||17|
|Credit Suisse Group||5||9|
|Mizuho Financial Group||8||-|
|Lloyds Banking Group||9||-|
- JPMorgan Chase moved to Tampa, Florida, home of a new burgeoning police state preparing for rowdy anti-Republican National Convention protests in August.
- Citibank moved to Dallas, Texas, hardly a bastion of organized progressive or radical populations.
- Morgan Stanley is holding its meeting in quiet upstate New York.
- Wells Fargo is staying well clear of NYC in San Francisco.
- Bank of America is bunkering down in Charlotte, NC, home of the other pre-political convention police state.
- And Goldman Sachs, that giant vampire squid sucking on the face of America? They’ve yet to announce the details of their annual meeting. But odds are they won’t be within walking distance of Zucotti Park.
“The real issue lies in understanding the huge gap between the "nominal rate" (the list price) and the "real rate" (the tax rate that most companies actually pay.) These two rates diverge widely. The nominal federal tax rate on the largest corporations is now 35 percent. State taxes, on average, bump this to 39.2 percent. This nominal rate ranks as the highest among developed countries. However, no major company really pays the nominal rate. Big companies enjoy a huge buffet of credits, shelters, deductions, and other preferences that reduce their rate to an average of 13 percent. Many profitable companies pay no federal income tax at all. Regardless of our nominal rate, our real corporate tax rate is among the lowest.”The ten banks, oil and coal companies that RAN researched are responsible for foreclosing on millions of people’s homes and polluting our air, water and climate. At the same time, we found that they pay next to nothing into a tax system that provides the very services that protect the homeless, the sick and our environment. Bottom-line, these dirty corporations don’t need any more handouts, bailouts, or subsidies. Our country does not have a money problem; it has a priorities problem. We’re subsidizing and bailing out multi billion dollar businesses at the expense of everything else: our economy, our climate, our health, and our future. Here's two things you can do about: 1. Tell President Obama; it's time corporate tax dodgers pay their fair share! 2. Join the 99%Power in taking direct action with thousands upon thousands to shine a light on the exact corporate actors who created this historically unjust economy. Under the banner of 99% Power, there will be more demonstrations leading up to and at corporate shareholder meetings this Spring than at any point in American history.
- Barclays Bank provided $300 million
- UBS provided $190 million
- Morgan Stanley provided $175 million
- Citi and JP Morgan Chase each provided $87.5 million
- Wells Fargo and Credit Suisse each provided $75 million
Dirty Energy is Over, Fund the Future Join Us and Put Wall Street on Notice: No More Money for Dirty Coal and Tar Sands Join our campaign to stop the financing of coal and tar sands by Wall Street. Coal and tar sands are the largest sources of greenhouse gas emissions in North America — causing catastrophic climate change, poisoning communities with toxic pollutants and destroying eco-systems with destructive extraction. Join Rainforest Action Network for our banks “Tour of Shame” as we call out the corporate finance behind dirty coal and oil extraction WHEN: Saturday, April 16th at 1pm WHERE: Meet in front of the DC Convention Center at 7th and Mt. Vernon NW CONTACT: Scott at firstname.lastname@example.org; 415-235-0596 Big Banks — Bank of America, Citi, JPMorgan Chase, Wells Fargo, PNC Bank and Morgan Stanley — raise billions of dollars for the fossil fuel industry every year. It’s time for Wall Street to take responsibility in how their investments affect public health and the climate. Join us on Saturday afternoon and demand a transition in energy financing from dirty coal to clean energy solutions like wind and solar.
- Since January 2010, Bank of America, Citi, Credit Suisse, Deutsche Bank, GE Capital, JP Morgan Chase, Morgan Stanley, PNC, UBS and Wells Fargo together provided more than $2.5 billion in loans and bonds to MTR companies.
- The top three financiers of MTR are PNC, Citi and UBS.
- Of the 10 banks in the report, Wells Fargo and Credit Suisse have the strongest MTR policies.