Banking on Coal: Undermining our Climate

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New report reveals U.S. banks’ leading role in global finance of coal mining
Friday, November 15, 2013

SAN FRANCISCO—Three U.S. banks: Citigroup, Morgan Stanley and Bank of America lead the financing of the world’s coal mining industry and are spotlighted in a new study entitled Banking on Coal, released today at the COP 19 in Warsaw, Poland. While coal consumption has declined in the U.S., globally, coal production has grown by 69 percent since 2000 and has now reached 7.9 billion tons annually. Coal is the single largest source of carbon emissions contributing to climate change.

Rainforest Action Network joined the German organization urgewald, the Polish Green Network and the International BankTrack Network in the report’s global release.

Banking on Coal shows 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.

“The scale of financing for the expansive coal mining industry internationally is staggering,” said Amanda Starbuck, Director of Rainforest Action Network’s Energy and Finance Program. “By funding this degree of coal extraction, these banks are exposing the world to even higher risks of global climate change, human rights abuses and biodiversity loss.”

The research also shows that coal finance has increased dramatically over the past few years. Since 2005 – the year the Kyoto Protocol came into force – bank financing for coal mining companies increased by 397 percent.

“Weather disasters, like Typhoon Haiyan in the Philippines, are an urgent wake-up call that people around the world are already paying the tragic price for climate change,” continued Starbuck. “Instead of taking the serious action needed to stem climate change, these banks are doing the opposite and choosing to profit by financing coal mining. This report shows that U.S. banks like Citigroup, Bank of America and Morgan Stanley pour billions of dollars into expanding production of the dirtiest energy source instead of supporting the clean energy solutions we need.”

The authors also analyzed their data according to the banks’ countries of origin and found that financial institutions from only three countries  - the U.S., the UK and China – collectively accounted for 57 percent of coal mining finance, 24 percent from U.S. banks alone.

“It’s mind-boggling,” said Heffa Schücking, Director of urgewald. “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.”

The report also contrasts the investments of the top 20 banks with their own statements and policies on climate change. Bank of America claims to be “financing a low carbon economy”; Citi credits itself as the “most innovative investment bank for climate change and sustainability,” and Morgan Stanley assures customers that it will “make your life greener and help tackle climate change.”

“It’s as if banks have a split personality disorder,” said Yann Louvel of BankTrack.“Banks need to face up to the real-world impacts that their financing decisions have. When they finance companies that blow up mountaintops or destroy jungles to extract coal, they have a responsibility for these impacts.”

The “Banking on Coal” report also examines the “hot spots” of global coal production and the destructive impacts that coal mining is having on India’s last tiger forests, on Appalachian communities in the U.S. or on scarce water resources in South Africa. For each of the “hot spots,” the report uncovers which banks have played the lead role in financing the expansion of the industry.

Today’s report is a sequel to the study “Bankrolling Climate Change” published in 2011 at the COP17 in Durban, which examined bank’s involvement in the entire coal industry, from coal mining to energy generation. This report focuses on the coal mining industry, but digs deeper to uncover the bank behind the mine.

Download full report: http://www.banktrack.org/download/banking_on_coal/banking_on_coal_4_67_6.pdf

                                                                                         

 

 

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Rainforest Action Network runs hard-hitting campaigns to break North America’s fossil fuels addiction, protect endangered forests and Indigenous rights, and stop destructive investments around the world through education, grassroots organizing, and non-violent direct action. For more information, please visit: www.ran.org