Earlier this month we reported Wells Fargo had moved to restrict its financing of mountaintop removal. The bank's decision is just one in a growing trend of financial institutions "taking a stand on industry practices that they regard as risky to their reputations and bottom lines," Tom Zeller Jr. of The New York Times reports. "The policy shift by Wells Fargo follows others over the last two years, including moves by Credit Suisse, Morgan Stanley, JPMorgan Chase, Bank of America and Citibank, to increase scrutiny of lending to companies involved in mountaintop removal — or to end the lending altogether."
"In some cases, the changing policies represent an attempt to burnish green credentials in areas where the banks had little interest, and there is no indication that companies engaged in the objectionable practices cannot find financing elsewhere," Zeller writes. Still analysts say the debate over climate change, water quality and other environmental considerations are forcing banks to take a hard look at who they lend money to. "Environmental risk has been on the radar for lenders since the 1980s and early 1990s, when courts began forcing some measure of responsibility on banks for the polluting factories, superfund sites and other environmental problems that had, to one degree or another, been facilitated by their financing," Zeller writes.
Now financial institutions are left to wonder what pollution is too much. "It’s one thing if your potential borrower is dumping cyanide in a river," Karina Litvack, the head of governance and sustainable investment with London-based investment management firm F&C Investments, told Zeller. "But if they’re dumping carbon dioxide into the air, which is not exactly illegal — what do you do? Banks are in kind of a quandary, because they are competing for business, and if they get holier-than-thou and start to play policeman, they risk allowing other banks to take that business." (Read more)
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