"We all know that climate change is happening."
Thus begins an important new report from BankTrack, a Netherlands-based nongovernmental organization (NGO). The burning of coal is one of the most significant contributors to climate change, responsible for as much as 80% of global greenhouse gas (GHG) emissions.
The construction of new coal-fired power plants is an expensive proposition as well. On average, the cost of a new plant is about $2 billion. Such projects obviously require bank financing; but financial institutions that are signatories to the Equator Principles commit to managing environmental and social risks in their project finance transactions.
A comparison of those banks named in BankTrack's new report as providing the most financing of coal-fired power plant construction with those that are designated as Equator Principles Financial Institutions (EPFIs) reveals inconsistencies, to say the least. And banks headquartered in the US, several of which are EPFIs, are among those whose inconsistencies are the most pronounced.
Leading the list of 93 of the world's leading banks are four from the US. Since 2005, financing of the construction of coal-fired power plants by JPMorgan Chase has exceeded $22 million. Following closely behind JPMorgan Chase are Citigroup ($18.6 million), Bank of America ($17 million), and Morgan Stanley ($16.4 million). Of the four banks, all but Morgan Stanley are signatories to the Equator Principles.
The report incorporates statements from the sustainability reports of the banks, which bring the inconsistencies between policy and performance into even sharper relief. For instance, the sustainability report of JPMorgan Chase states, "Helping the world transition to a low-carbon economy," while Citi proclaims itself the "most innovative bank in climate change."
"The fact is that while banks are employing a lot of 'climate speak', this is more or less a smoke screen to continue their financing of the coal industry," the report states.
Overall financing for new construction by the 93 banks since 2005 has totaled $313.5 billion. Furthermore, the report points out, financing for the coal industry in 2010 was almost twice as high as it was in 2005.
If all new coal-fired power plants now scheduled for construction come on-line, the report warns, their lifetime emissions will equal those of all coal-burning activities since the beginning of industrialization.
"Banks need to end support for new coal extraction and delivery projects," the report concludes. "Continuing to finance new coal-fired power plants that will emit huge amounts of CO2 over the coming decades is irresponsible."
This article originally appeared on SocialFunds.com, and is reprinted with permission.
Power plant photo via Shutterstock.