Sunday, January 23, 2011

US Banks greenwashing with carbon principles says RAN report

Coal smells like profit - Bank of America protest
Banks have still got a long way to go to meet their own carbon principles says a new report from the Rainforest Action Network (RAN) in the US. Three leading banks put forward these carbon principles in February 2008 to make it tougher to finance conventional coal-fired plants in the US as a way to mitigate carbon emissions and climate change.

Six banks have now signed on to the Carbon principles, but the RAN report indicates adherence to the principles has been hollow and is just a greenwashing exercise by the banks.


"The Carbon Principles were a significant step in establishing carbon risk as important for banks to consider. Based on the serious threat posed by global climate change, however, it is time leading financial institutions develop a more robust framework of policies and practices that concretely reduce emissions from electric power," said Amanda Starbuck of Rainforest Action Network.

The Carbon Principle banks now comprise six of the top seven ranked banks in Bloomberg League Tables for underwriting and loans in the electric utility sector in the U.S. They include Bank of America, JP Morgan Chase, Citi, Wells Fargo, Credit Suisse and Morgan Stanley. The report says that these banks accounted for more than 55% of the $125 billion in loan and bond underwriting in the United States to the sector from the beginning of the Carbon Principles implementation date of August 4, 2008 through June 30, 2010.

According to RAN there is on first level of screening "no clear pattern emerges distinguishing CP banks from non-CP banks by the percentage of financing deals that involve such utilities. It is clear, CP banks are not disproportionately avoiding financing deals with clients actively pursuing new coal."

"In short, have the Carbon Principles restricted financing to coal-fired power plants or encouraged greater levels of clean energy investments? Sadly, the answer is no," continued Starbuck. "Our research reveals that, while the broader economy has been shifting away from coal for myriad reasons, if the Carbon Principle banks want to take leadership in addressing coal and climate change in the financial sector they must do more."

Recommendations of the Rainforest Action Network report - The Principle Matter: Banks, Climate & The Carbon Principle (PDF):

* Phase out support for new and existing coal extraction and delivery projects
* Phase out support for new and existing coal-fired power plants
* Public acknowledgement of the risks and urgency of the climate crisis, and the need for economy and society-wide responses.
* Assess and report on the GHG emissions associated with all their loans, investments and other financial services (Financed emissions) to develop a baseline on which to set reduction targets, starting with the most GHG intensive sectors.
* Establish portfolio and business-unit emissions reduction targets in line with what is considered necessary to stop climate change from unfolding, as based on current scientific consensus on climate stabilization;
* Performance, not just procedural, standards for financial transactions and client engagement.
* Science-based emissions reduction targets that include emissions from both operational as well as financed emissions.
* A commitment to support political climate policy frameworks and emission reduction goals that will limit global temperature rise to between 1.5-2C
* A commitment to dramatically increase support for financing emissions reduction technology, renewable energy production and energy efficiency in all business lines
* Development of products and services to help retail customers address climate change

In compiling the report, RAN compared Carbon Principles with non-Carbon Principles bank underwriting in the U.S. electricity sector; reviewed signatory bank reporting of Carbon Principles implementation; interviewed bank and civil society participants in the Carbon Principles process; and examined alternative policy frameworks.

The full report and supporting data can be found at ran.org/carbonprinciples.

If you live in the US you can use the Rainforest Action Network form to Tell Carbon Principles Banks: Stop Funding Coal Plants

Photo by Steve Rhodes - Coal smells like profit - Bank of America protest - Copyright Creative Commons Attribution-NonCommercial-NoDerivs 2.0 Generic (CC BY-NC-ND 2.0)