Wall Street announces "Carbon Principles" - but what do they mean?
So, big news on Wall Street today regarding coal and our climate. Three of the largest investment banks (Citigroup, Morgan Stanley, and JP Morgan Chase) announced the formation of the “Carbon Principles” - a set of guidelines the banks will follow when lending money to carbon-intensive projects, such as coal-fired power plants.
While the banks don’t go so far as to say they WON’T finance coal-fired power plants - if I were the CEO of a utility or coal company - I’d be worried. Here’s my analysis of these principles:
- Banks are REALLY keen on not having any accountability for their investments -legally, or for their brand image. They want to pretend an economy is only numbers and to be accountable only for the math and profits - not for the real-world, on-the-ground impacts their participation in the economy has. Banks are happy to address the carbon footprint of their internal operations (pushing papers around is relatively benign, atmospherically-speaking) - but if their footprint includes their “financed emissions” - they start to look bad. REALLY bad. The fact that banks are even talking about the impacts of their investments, and that they have a responsibility they have towards socially and ecologically responsible lending practices is a good first step. Banks weren’t even really talking about coal or their financed emissions a year ago.
- The banks pledge “Enhanced Diligence” in evaluating the carbon risks of coal-fired power plants, which includes the potential liability for future carbon regulation, requirements for carbon storage and sequestration, and to prioritize zero/low carbon projects. Again - the banks aren’t saying straight-up they won’t fund coal - but they at least appear to putting up a few hurdles for carbon-intensive projects to gain financing. I can’t see how they would be able to fund a coal-fired power plant if they are actually honestly abiding by these principles.
- Utility companies were rumored to have involved in drafting these principles initially - but in the end they were not signatories to the principles, they are merely listed as being “consulted”. Did they get
coalcold feet in the process of drafting this document? Does this mean that the utilities see serious intent from the banks’ to put a damper on coal? That remains to be seen - but it’s a good sign.
- These principles don’t have any sort of binding commitments to reduce their financed emissions. While guidelines are nice - there simply needs to be a complete moratorium on coal-fired power plants and other carbon-intensive industries. This is the crucial step for our climate - and banks should have an outright moratorium on financing new coal development - not merely guidelines.
- These principles only partially address the problems of coal - they still ignore incredibly destructive extraction methods such as mountaintop removal mining.
- Environmental Defense and NRDC are not listed as signatories either - does this mean even they see this document as not being substantive enough to fully endorse? That too, remains to be seen.
- Bank of America is noticeably absent from the principles. As a leading financier to some of the dirtiest coal developments in the country - where are they in this process?
- Despite big past commitments to “green banking” - Wall Street still pours money to King Coal hand over fist. Banks need to be much more transparent about where their investments are going - all the major Wall Street banks finance hundreds of times more money to dirty energy than to clean energy. I hope the tides are changing - but so far they haven’t walked their own talk.
For the past year, a huge coalition of groups has been campaigning on Wall Street Banks’ to end their financing of the dirty coal industry. Groups such Rainforest Action Network, Energy Action Coalition, Rising Tide North America, Coal River Mountain Watch, and many more have been leading the campaign - holding hundreds of public demonstrations, filing shareholder resolutions, and taken non-violent direct action to demand that banks stop banking on the destruction of our climate.
Our strategy of campaigning against the financing of coal is two-fold. First - we are demanding that banks (where many of us hold our checking accounts, credit cards, mortgages, or student loans) should not be profiting from, nor accelerating the destruction of our climate, environment, and communities. We are taking the money out from under carbon-intensive industries like coal and tar sands - rather than fighting one destructive project at a time.
But just as importantly - we are demanding a future where our economy is in sync with our ecology - where investments are made in clean energy, sustainable development, and justice for our communities. As we are seeing now with a looming recession, the credit crisis, and mortgage meltdowns across the country - our current economy is destroying the social and ecological fabrics of our society. People are demanding a new world - based on clean energy, ecological principles, social justice, and an economy that works for people, not profit.