Banks are starting to have second thoughts about making loans to companies that destroy the environment. Banks have made huge profits financing destructive industries such as mountaintop removal mining. However, pressure by environmentalists and court decisions holding banks accountable for financing environmental destruction are mounting. A growing number of banks are choosing to avoid environmental risk at the expense of losing business to less scrupulous lenders.
Banks reconsider lending for environmental destruction
Mountaintop removal mining companies will always get their money somewhere. But the New York Times reports that bank industry analysts are saying intense debate about climate change, water quality standards and other environmental issues is compelling lenders to think twice about where they extend credit and to whom. Recently Wells Fargo made a statement about “considerable attention and controversy” related to mountaintop removal mining. The banking behemoth said its financing for mountaintop mining companies was “limited and declining.” The decision by Wells Fargo emulates similar policy shifts by Credit Suisse, Morgan Stanley, J.P. Morgan Chase, Bank of America and Citibank. All these banks vowed to either reconsider lending to mountaintop mining companies or to discontinue financing them altogether.
Mountaintop removal mining keeps coal cheap
On Monday, environmentalists from the Appalachian region implored the Obama administration to outlaw mountaintop mining. The Associated Press reports that the group announced it will hold a rally in Washington Sept. 27 and invited the president to attend. To get coal via mountaintop removal mining, forests are clear-cut first. Then explosives blast apart the rock. Huge machines eight stories high scoop away up to 800 feet of mountaintop to expose coal seams. The earth left behind is dumped into the valleys below, covering streams and wildlife habitat. Operators say it’s the cheapest way to reach coal for electric power plants and supports tens of thousands of jobs. The Appalachian coal industry will have a Washington rally of its own on Sept. 15 to protest federal regulations it says remove mining jobs.
Other banks eager to fill the void
Since 2007, bank financing for mountaintop removal mining companies has been a target of the Rainforest Action Network (RAN). Organicconsumers.org reports that the group’s efforts have helped persuade the top four banks in the country to back away from Massey Energy, a leading mountaintop mining company based in West Virginia. Massey Energy was involved in the Upper Big Branch mine explosion that killed 29 miners in April. But other banks have been eager to fill the financing void left behind. According to Bloomberg data, PNC and UBS are currently the lead financiers of mountaintop removal mining. PNC finances mining companies responsible for almost half of all mountaintop removal coal mined in the U.S.