‘Green’ banks are still backing coal
To believe their PR, banks are now paragons of clean, sustainable economic development.
Picking JP Morgan at random as the biggest investment bank, its website is plastered with dozens of stories about its good works, from promoting gender balance to supporting black Americans and veterans. It has committed to $200bn of environmentally clean financing.
All good and there is no reason to cast aspersions on this. But look out of the window and the same dirty old economy is belching away — financed by banks.
Siberian Coal Energy (Suek) is about to close a loan refinancing that it had hoped would be $1bn. The loan is going to finish smaller than that — perhaps because some banks, including ING and Société Générale, will no longer lend to Suek because of its coal exposure.
But Suek is hardly facing a funding squeeze. Its new loan will be priced at 185bp — 15bp tighter than its rate last year, and too tight for many Russian banks. Banks from China, Japan and the US will be prominent in the deal. If some of them are also green bond issuers it will be no surprise.
It is debatable whether it is finance’s job to green the economy. But many financial actors, including banks, have voluntarily claimed this responsibility. They are filling the vacuum left by the world’s cowardly governments.
Since it is now accepted that finance should be helping the climate, it is fair to point out that financing coal is highly inconsistent with banks’ claims to be doing this.
But just making coal a dirty word is not good enough. Oil and gas are also incompatible with the survival of society as we know it. Banks have some soul-searching to do.