Banks Are Increasingly Doing Environmental Due Dilligence

Published on August 31st, 2010 | by

The New York Times is reporting that major multinational banks are growing weary of delivering debt to industrial extraction projects, such as mountaintop removal coal mining in West Virginia.

The piece looks at a recent policy shift by Wells Fargo in providing financing for coal projects:

“In the most recent example, the banking giant Wells Fargo noted last month what it called “considerable attention and controversy” surrounding mountaintop removal mining, and said that its involvement with companies engaged in it was “limited and declining.”

Apparently Wells Fargo has been a relatively small player in the sector ($78 million in bonds and loan financing since 2008 according to the Rainforest Action Network). However, HSBC, Citibank, Credit Suisse, Morgan Stanley, JP Morgan Chase and Bank of America have begun demanding greater environmental impact disclosure from potential mining customers.

While there’s no doubt increased due diligence in mining deals has something to do with flat oil prices over the past year, environmental risk assessment is becoming a material piece of financial risk assessment. This is a leadership position for banks trying to appeal to the SRI community.

Image Credit by Chuck “Caveman” Coker via Flickr under a CC license


About the Author

A lifelong conservationist, angler, gardener and writer, Lane is a Corporate Responsibility strategy consultant based in Chicago, where he currently works a CR consultant for PricewaterhouseCoopers (PwC). Prior to joining PwC, Lane was a global sustainability performance and stakeholder engagement specialist for Sodexo North America. He has experience in microfinance program evaluation at Grameen Foundation. A former President of the Net Impact Chapter at the University of California, San Diego (UCSD), Lane has a master's in International Development Economics from the School of International Relations and Pacific Studies at UCSD (IR/PS) and a bachelor's in history and international studies from Kenyon College. Prior to working in the sustainable business sphere, Lane spent six years as a communications and marketing professional focusing on arts and culture in New York City, where his work included the creation of the jazz website gothamjazz.com and serving as the publicist for the New York Philharmonic.