Extreme Investments: U.S. Banks and the Coal Industry




RAN, Sierra Club, and BankTrack’s 2013 Coal Finance Report Card

 

In this fourth annual Coal Report Card, Rainforest Action Network, Sierra Club, and BankTrack evaluated the largest U.S. banks based on their financing of coal, which is the largest contributor to U.S. greenhouse gas emissions.

In spite of the human and environmental costs of coal as well as the growing financial risks associated with investments in the coal industry, U.S. banks financed a combined $20.8 billion for the worst-of-the-worst companies in the coal industry in 2012. Bank of America, Citigroup, and JPMorgan Chase had the most exposure to coal among U.S. banks in 2012, financing $3.03 billion, $2.75 billion, and $2.17 billion respectively in loan and underwriting transactions with companies that engage in mountaintop removal coal mining or electrical utilities that are expanding or extending the lives of their coal-fired power plant fleets.

This year’s report card highlights additional risks associated with companies that transport coal or are involved with coal export terminals. We also include case studies on the most risk coal investments banks are exposed to, including Patriot Coal, which declared bankruptcy in 2012 and began to phase out its MTR mining operations, and the Tennessee Valley Authority, which recently announced controversial plans to extend the life of a coal plant.

With few exceptions, bank lending and financing policies for the coal sector for this year’s report card received disappointingly low grades. Although Wells Fargo improved to a “C” for taking steps to improve its mountaintop removal mining lending practices and HSBC North America received a “C-“ for policies covering its lending to coal-fired power, grades for the rest of the U.S. banking sector showed almost no improvement from last year.

2013 Coal Finance Report Card Policy Grades:


  2013 Mountaintop Removal Grade 2013 Coal-Fired Power Plant Grade
Bank of America C- D
BNY Mellon F F
Citigroup C- D
Goldman Sachs D

D

HSBC North America D+ C-
JPMorgan Chase D+ D
Morgan Stanley C- D
PNC Financial C- F
US Bank D D
Wells Fargo C D

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From the cradle to the grave, coal is a risky business. Each stage in the life cycle of coal–extraction, transportation and combustion–presents increasing health, environmental, reputational, legislative and financial risks.
As outrage at the country’s largest banks increases with the Occupy Movement and record bank customers move money to credit unions and local banks, RAN finds yet another reason customers should be wary of BoA. Our campaign briefing shines a light on the company as the country’s top financier of the coal industry, in turn, a leading contributor to climate change in the United States.