Banks Toughen Lending Rules to Coal, PNC & UBS Still Bucking the Trend

“We’re the greenest bank in the business,” claims Pittsburgh, Pennsylvania-based PNC bank (PNC:US) on its web site. “We’re a company committed to lighting the path to a greener way of doing business and a greener way of life.”

Yet, while PNC has racked up an impressive amount of recognition for its green building designs, energy efficiency efforts, and minimizing of customer waste, it has bucked a banking sector trend by continuing to finance environmentally destructive mountaintop removal mining.

And, even as the nation’s largest banks have severed ties with Massey Energy, owner of the Big Branch Mine in West Virginia, where an explosion in April killed 29 workers, PNC has maintained its financial support of the embattled company led by its outspoken and frequently vilified CEO Don Blankenship.

“The importance of the major banks moving away from mountaintop removal cannot be underestimated,” says Rebecca Tarbotton, Executive Director of the Rainforest Action Network. “What we see is a trend,” she adds, “and PNC is going against that trend by continuing its relationships with mountaintop removal companies. They are holding investments in businesses that are increasingly becoming a black-eye for the financial sector.”

Over the past two years, Bank of America, Citibank, JPMorgan Chase, and Wells Fargo– the four largest banking institutions in the U.S. – have all adopted enhanced environmental review procedures for financing MTR mining and construction of coal-fired power plants.

While these policies fall short of the hopes of environmentalists for unequivocal divestment from the coal industry, each bank has outlined due diligence procedures that have complicated and in some cases shut off the availability of cash and bond underwriting for mining companies and coal energy projects. Credit Suisse and Morgan Stanley have passed similar policies.

None of these banks currently provide funding to Massey Energy, according to the Rainforest Action Network and the Sierra Club.

Yet according to RAN, PNC has become the largest U.S. financier of MTR mining companies, providing $500 million in loans and bond underwriting to the coal industry, with an estimated $80 million going directly to MTR mining operations in Appalachia.

PNC finances six companies, including Massey Energy, that together account for nearly half of all MTR mining in Appalachia, RAN estimates, based on data collected by Bloomberg. A May report card of banking industry practices in the coal sector authored jointly by RAN and the Sierra Club issued PNC the lowest possible grade – F – due to its financial support for the coal industry and its lack of an environmental or corporate social responsibility office.

“PNC has produced a CSR Report that will be distributed and available on the pnc.com website the first week in September,"  corporate communications officer Brian E. Goerke said in an email in response to a query from SolveClimate News. "Beyond that, our policy prevents us from speaking about individual clients and their specific business situations.”

Like PNC, Switzerland-based investment firm UBS (UBS:US) has continued to support the coal industry, financing Massey Energy as well as several other leading MTR mining companies. According to RAN, it is the largest investor – U.S.-based or international – in MTR mining. While UBS’s corporate responsibility policy includes enhanced due diligence procedures for determining the potential environmental impacts of its investments, RAN and the Sierra Club have criticized the bank’s lack of a specific policy toward MTR mining. In their May report card, the organizations also issued UBS their lowest possible grade.

Christian Leitz, head of UBS’s Corporate Responsibility Management, told SolveClimate News that the firm adopted internal review procedures in 2009 for financing metal and mining projects. But, he added,

“UBS does not publish its internal industry sector guidelines,” he said. "We are currently reviewing our risk management approach pertaining to transactions with companies involved in MTR. We will discuss this with certain stakeholder groups shortly.”

Wells Fargo Takes a Step