Think the big banks have abandoned coal? Think again
Starting three years ago, the largest U.S. banks vowed to cut back on lending to the coal industry.
“The bank has a responsibility to help mitigate climate change by leveraging our scale and resources to accelerate the transition from a high-carbon to a low-carbon society,” Bank of America said in its coal policy in May 2015.
Their pledges seemed so dramatic that Paul Argenti, a professor of corporate communication at Dartmouth’s Tuck School of Business, began citing them in lectures as a rare example of a corporate principle’s trumping profits. “I read it as: They were done,” he said.
But the banks never actually promised to walk away from coal completely. And now, with coal companies enjoying a small resurgence under the Trump administration, banks are again embracing the industry.
At the time of the pledges, the three biggest coal mining companies were in bankruptcy, the United States was signing a pact to reduce carbon emissions and cheap natural gas was forcing coal-fired power plants out of business. There were few coal loans to make. But Peabody Energy, Arch Coal and Alpha Natural Resources have emerged from bankruptcy. President Donald Trump has vowed to support the industry.
Five of the country’s biggest banks are lending tens or hundreds of millions of dollars to coal companies again, in one case eclipsing what they lent in 2014, before the industry entered a nose dive, according to an analysis by Rainforest Action Network.
JPMorgan’s coal lending increased to US$654 million in 2017 from $32 million in 2015. That was more than the $570 million the bank lent to coal interests in 2014. The vast majority of JPMorgan’s coal loans in 2017 were to Peabody, which emerged from bankruptcy that April.
Morgan Stanley’s coal loans, though well below their 2014 levels, more than doubled from 2015 to 2017. Goldman Sachs and Bank of America each added new coal loans last year. Citigroup made more such loans in 2016 and 2017 than it did in 2015.
Combined, the five banks issued about $1.5 billion in new coal-related loans last year, according to Rainforest Action Network.
The analysis includes loans to companies like Glencore and BHP Billiton, which produce commodities, such as copper and oil, in addition to coal.