Banks Invest Billions in Coal, Then Claim They're Green

We’ve known for ages that coal power is bad. It’s bad for the environment, bad for our health, and it’s set to push us past our carbon budget and into a global warming meltdown pretty quickly if we don’t stop building new plants. Nowadays, that’s something pretty much everyone recognises—including the very same institutions that are bankrolling the production of the planet-killing fuels. A new study highlights the hypocrisy of financial institutions that claim to support green initiatives, yet are also spending scores of billions of dollars to finance the coal mining industry.

The study, called “Banking on Coal,” was published by an international group of organisations, found that commercial banks have channeled $159 billion (€118 billion) to the world’s top coal mining companies through loans and underwriting since 2005. That's the same year the Kyoto Protocol was signed to commit countries to reducing carbon emissions. The report observed a pretty steep growth curve during that time, with an increase of 397 percent in financial contributions from 2005 until 2012 (It is, however, worth noting that the annual amounts vary a lot, and the curve is currently on a downward trajectory).

The report highlights the power of the finance sector when it comes to energy and climate change. “Even the largest mining companies or utilities typically rely on banks to provide or mobilise the lion’s share of capital for their investments,” the authors write. “By the same token, banks, of course, also play a key role in mobilising financial resources for the renewable sector. Through their allocation of financial resources, banks are therefore in a unique position to either help of hurt our climate.”

They looked at the portfolios of 100 financial institutions and named and shamed the 20 banks that poured the most money into coal from 2005 to mid-2013, which together accounted for 71 percent of coal's financing. US bank Citi, responsible for over €7 billion in loans and underwriting, took the top spot, and was closely followed by Morgan Stanley. Bank of America, JP Morgan Chase, and Deutsche Bank rounded off the top five, although in recent years their contributions have been overtaken by the Industrial and Commercial Bank of China. Overall, US banks were responsible for most of the pot, followed by China and the United Kingdom.

While it’s hardly a surprise that banks are getting their hands dirty in what they probably see as just another profitable sector, the report’s findings underscore the absurdity of the same banks that then boast about their green credentials.

“Almost all of these banks have expressed their concern about global warming and have made far-reaching statements regarding their commitment to a ‘low-carbon economy,’” the researchers wrote. “They are obviously not putting their money where their mouth is.”

Citi has in the past won an award for “most innovative investment bank for climate change and sustainability,” and Bank of America has given itself the tagline “Financing a low carbon economy.” The report’s authors explained that banks get around the issue by talking about their carbon footprint purely in terms of “operational emissions”—which include things like the impact of lighting and heating offices or having employees travel by car and plane. Unsurprisingly, emissions from those kind of activities don’t even come close to the carbon footprint of an actual coal plant.