Top Banks are "Climate Culprits" - Report

Published by MAC on 2011-12-05
Source: Statement, Guardian, Reuters

Banks Seen As Climate Culprits At Global Talks: Report

By Agnieszka Flak

Reuters

1 December 2011

Major global banks are exacerbating the fight against global warming by supplying power utilities and mining firms with ample funds to build coal-fired plants, according to a report released by non-governmental groups at the climate talks in Durban.

The study examined the portfolios of 93 major banks and found that coal financing supplied by those institutions to the coal industry totaled 232 billion euros ($309.4 billion) since 2005 when the Kyoto Protocol came into force.

"If banks provide money for these projects, they will wreck all attempts to limit global warming to 2 degrees Celsius," said

Heffa Schuecking of environmental think tank urgewald who worked on the report.

The Kyoto pact was set up to reduce greenhouse gases emitted by developed countries by an average of 5.2 percent below 1990 levels during the five-year period up to 2012.

At the same time many countries still invest in coal-fired plants, especially India and China, to supply their growing economies.

Among the top 20 banks listed in the report are institutions from the United States, the United Kingdom, Germany, France, Switzerland, China, Italy and Japan.

JP Morgan Chase, Citibank and Bank of America are the top three banks on the list.

"Between 2005 and 2010, coal financing almost doubled. If we don't take banks to task now, coal financing will continue to grow," said Tristen Taylor from environmental group Earthlife.

A 600 MW power plant costs around $2 billion to build, making it necessary for developers to rely heavily on banks to provide and mobilize the money they need.

The report argued that coal mining was harmful to natural landscapes, communities and water resources while coal-fired power plants are blamed for major emissions and waste.

Each new power plant is likely to add millions of tons of annual emissions of CO2 over the lifetime of these plants of 30-40 years.

Host of the climate talks South Africa is currently building two 4,800 MW coal-fired plants to meet fast-rising demand for power in Africa's biggest economy.

The country has big plans for rolling out renewable energy investments to cut its reliance on coal - now 85 percent of its energy mix - but this is likely to take years to materialize.

Many emerging countries have no option than fossil fuels and coal to power their development. For banks, the investments can be seen as practical projects to help finance growth.

South Africa has vast coal reserves and green energy is more challenging and costly to build on a meaningful scale, which means coal is likely to be part of the country's energy portfolio for some time to come.

State-owned power utility Eskom spews out some 225 million tons of CO2 each year.

The report urged banks to shift their portfolios towards renewable energy and energy efficiency projects and implement CO2 reduction goals for the emissions they help finance.

(Editing by James Jukwey)

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Bankrolling Climate Change

NGOs present groundbreaking research on banks' involvement in coal financing

BankTrack, groundWork, Earthlife and urgewald

30 November 2011

Durban - Today, the German environment organisation urgewald, the South African social and environmental justice organisations groundWork and Earthlife Africa Johannesburg and the international network BankTrack will present new research on the portfolios of the world's leading banks. The study "Bankrolling Climate Change" examines commercial banks' lending for the coal industry and provides the first comprehensive climate ranking for financial institutions.

"We chose to look into coal financing as coal-fired power plants are the biggest source of man-made CO2 emissions and the major culprit in the drama of climate change," explains Heffa Schuecking of urgewald. "In spite of the fact that climate change is already having severe impacts on the most vulnerable societies, there is an abundance of plans to build new coal-fired power plants. If banks provide money for these projects, they will wreck all attempts to limit global warming to 2° Celsius," says Schuecking.

The organisations examined the portfolios of 93 of the world's leading banks and looked into their support for 31 major coal-mining companies (representing 44% of global coal production) and 40 producers of coal-fired electricity (which together own over 50% of global coal-fired generation capacity). The total value of coal financing provided by these banks since 2005 (the year the Kyoto Protocol came into force) amounts to 232 billion Euro.

The study identifies the top twenty "climate killers" in the banking world. Among the top twenty are banks from the United States, the United Kingdom, Germany, France, Switzerland, China, Italy and Japan. The top three banks fuelling climate change worldwide are JP Morgan Chase (EUR 16,5 bio.), Citi (EUR 13,7 bio.) and Bank of America (EUR 12,6 bio.).

Coal-fired power plants are not cheap to build. Typically, a 600 Megawatt plant will cost around US$ 2 billion. Power producers therefore rely heavily on banks to provide and mobilize the necessary capital for coal plants. "Our figures clearly show that coal financing is on the rise," notes Tristen Taylor of Earthlife Africa Johannesburg. "Between 2005 and 2010, coal financing almost doubled. If we don't take Banks to task now, coal financing will continue to grow," he warns.

The study looks into the statements of the top climate killer banks and also examines their existing climate policies. "Interestingly, almost all of the top twenty climate killer banks in our ranking have made far-reaching statements regarding their commitment to combating climate change," explains Yann Louvel of BankTrack. "However, the numbers show that their money is not where their mouth is." He also notes that the policies many banks have adopted and the voluntary initiatives they have signed on to like the "Carbon Principles" or the "Climate Principles" have failed to make any difference in banks' portfolios.

"Our study names and shames the banks that are destabilising our climate system," says Bobby Peek from groundWork. "Plans for new coal fired power plants and coal mines are meeting with fierce resistance all over the world and we are going to begin turning that heat on the banks", explains Peek. The study calls on banks to become responsible climate actors and to quit coal. According to the NGOs, banks need to shift their portfolios to renewables and energy efficiency and set and implement ambitious CO2 reduction goals for their financed emissions.

The table shows the top twenty financiers of the coal industry since 2005.

The Top Twenty Climate Killer Banks

Bank	in million Euro	Ranking
JPMorgan Chase	16,540	1
Citi	13,751	2
Bank of America	12,590	3
Morgan Stanley	12,117	4
Barclays	11,514	5
Deutsche Bank	11,477	6
Royal Bank of Scotland	10,946	7
BNP Paribas	10,694	8
Credit Suisse	9,495	9
UBS	8,217	10
Goldman Sachs	6,770	11
Bank of China	6,323	12
Industrial and Commercial Bank of China	6,182	13
Crédit Agricole / Calyon	5,637	14
UniCredit / HVB	5,231	15
China Construction Bank	5,110	16
Mitsubishi UFJ Financial Group	4,980	17
Société Générale	4,742	18
Wells Fargo	4,523	19
HSBC	4,432	20
Data provided by Profundo

The study will be presented at a side event during COP17 in Durban at 11:30 a.m. on November 30th in the Hex River room. A full copy of the study with a ranking of all the researched banks can be downloaded here. The underlying data for this research were provided by Profundo economic research. They can be found here.

For further information or interviews, contact:

Heffa Schücking, Tel: (49)-160-96761436

Yann Louvel, Tel: (33)-688-907868

Bobby Peek, Tel: (27)-82-4641383

Tristen Taylor, Tel: (27)-84-2502434

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Coal study names top 20 'climate killer' banks

JP Morgan Chase tops list of institutions that have financed coal-mining and coal-fired energy generation

By Fiona Harvey, environment correspondent

Guardian

30 November 2011

Barclays, the Royal Bank of Scotland and HSBC are among the top banks that have lent billions of euros to the coal sector - despite their much-vaunted environmental credentials, a new investigation has found.

Financing coal is controversial, because it is the dirtiest fossil fuel and responsible for billions of tonnes of emissions of carbon dioxide globally, as well as other pollutants such as soot particles and mercury.

The list of top 20 institutions that have financed coal-mining and coal-fired energy generation reads like a roll-call of the world's biggest banks, with three American banks - JP Morgan Chase, Citigroup and Bank of America - topping the list. Between them, these three have provided at least €42bn to the coal sector since 2005.

Barclays took fifth place, having lent more than €11.5bn to big coal companies in the last seven years, while RBS came in seventh having lent or raised finance amounting to nearly €11bn over the period. HSBC just scraped into the top 20, with €4.4bn of finance.

The research was compiled by a group of NGOs, including German environmental group Urgewald, the international network BankTrack andEarthlife Africa Johannesburg. It took experts more than seven months to uncover the data, because banks do not declare it publicly - many banks do not know how much they lend or raise finance to the coal sector, or how many shares or other assets they own in coal. The figures were found by examining the public reports of the biggest coal mining and coal-fired power generation companies, and the true finance figures are likely to be much higher.

The NGOs have labelled the banks "climate killers" because their financing efforts have helped to expand coal in the past decade. Many of the banks on the list subscribe to environmental principles, such as cutting their own greenhouse gas emissions and conducting environmental impact assessments on projects they finance.

Heffa Schücking of Urgewald said: "We chose to look into coal financing as coal-fired power plants are the biggest source of man-made carbon dioxide emissions and the major culprit in climate change. In spite of the fact that climate change is already having impacts on the most vulnerable societies, there is an abundance of plans to build new coal-fired power plants."

Shücking said shareholders in the listed banks should be concerned, because financing dirty fuels was increasingly risky in the face of the growing threat of climate change, and increasing moves to limit greenhouse gas emissions under national regulations.

She added: "If banks provide money for these projects, they will wreck all attempts to limit global warming to 2C [which scientists regard as the limit of safety]."

The figures include bank lending to coal companies, equity financing raising for the companies, and other sources of financing such as bond issues, as well as coal assets owned by the banks - including physical assets such as coal mines or power plants, and shares in coal companies. The researchers examined the annual reports of coal companies making up 44% of global coal production, and 51% of global coal-fired energy generation, between 2005 and September 2011.

Several banks told the Guardian they did not track how much they lent to the coal sector, and that such lending did not affect their environmental commitments.

RBS said: "Since 2006, RBS has lent more money to wind power projects than to any other type of energy project. Just as society as a whole has to make a transition to renewable energy sources, so will the banks that fund energy production. RBS has been one of the most active banks in the world in funding renewable energy so we are at the forefront of helping finance that transition."

Mary Church, campaigner at Friends of the Earth Scotland, said: "Since the bailout in 2008, it's taxpayers' money that RBS has been investing in this devastating industry."