Investors “have filed
nonbinding shareholder resolutions urging at least four banks to shed
more light on loans they make to oil, gas, coal and other companies
whose practices create carbon emissions. They are also pressing the
banks to develop strategies to address climate-change risks…”
The pressure on banks gained traction after a Securities and Exchange Commission decision last year allowed shareholders to advance a climate-change resolution at PNC Financial Services Group Inc. Agency staff denied PNC’s request to ignore a proposal that sought to shed light on the Pittsburgh-based bank’s role as a lender to the coal industry in Appalachia, saying the resolution “focuses on the significant policy issue of climate change.” The nonbinding resolution garnered support from 22.8% of the bank’s shareholders at its April annual meeting—above last year’s 18.1% average for climate and energy-related proposals tracked by proxy adviser Glass, Lewis & Co.—but wasn’t adopted by the bank.
According to the Journal,
the PNC resolution has been resubmitted and the campaign has been
expanded to include Bank of America and Capital One: “The investors say
banks haven’t adequately grappled with climate issues, particularly
emissions stemming from loans to oil and gas companies. Regulators
released guidance four years ago encouraging all public companies to
disclose the effects of climate change on their businesses, but the
investors say it hasn’t led to an increase in the quality or quantity of
the disclosures.”
The Journal article comes almost three months after publication of Banking on Coal,
a report to the United Nations released by the Rainforest Action
Network (RAN), among other environmental groups, at last year’s UN
Climate Change Conference in Warsaw, Poland. The report revealed, RAN noted,
“the finance industry’s central role in coal mining and found that in
the past eight years, 89 commercial banks provided $158 billion in
financing to mining companies. Seventy-one percent of the full amount,
or $112 billion, was provided by only 20 banks.
The top three banks ranked in the report are Citigroup ($9.76 billion), Morgan Stanley ($9.69 billion) and Bank of America ($8.79 billion). Among the top 20 are also Swiss, German, Chinese, British, French and Japanese banks. The authors investigated commercial lending and investment banking services provided to 70 coal-mining companies, which collectively account for 53 percent of global coal production.
According to the report to the
UN, financial institutions from the United States, the United Kingdom
and China have provided 57 percent of coal financing: “Since 2005 — the
year the Kyoto Protocol came into force — banks’ financing for coal
mining companies increased by 397 percent.”
Heffa Schücking, director of
the German environmental and human rights organization urgewald and lead
author of the report, said, “It’s mind-boggling to see that less than
two dozen banks from a handful of countries are putting us on a highway
to hell when it comes to climate change. Big banks already showed that
they can mess up the real economy. Now we’re seeing that they can also
push our climate over the brink.”
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