Banks go cold on most polluting firms

It is not just small businesses and cash-strapped first-time buyers who are struggling to get bank loans at the moment.

Some of the world's most polluting companies could also find financing increasingly difficult to come by, after two of the world's largest banks said that they would cease lending to some of their more environmentally damaging clients.

Bank of America (BoA) and HSBC have this week backed up their commitment to green investment guidelines by announcing that they are to respectively phase out backing for controversial mining and forestry projects.

Earlier this year, Bank of America joined with JP Morgan Chase, Citi and Morgan Stanley in signing up to the Carbon Principles, a set of voluntary guidelines requiring banks to consider climate change-related risks when making investment decisions.

Meanwhile, HSBC was this week confirmed as one of the founding members of the Climate Group's Climate Principles, a similar framework designed to help financial institutions assess and manage climate risks.

Now, in a clear sign that carbon-intensive projects will find it harder to attract capital as a result of the guidelines, Bank of America said on Wednesday that it would "phase out financing of companies whose predominant method of extracting coal is through mountain top removal".

Setting out its new coal policy, the bank said that it recognised that coal would "continue to supply a significant amount of the energy needed to power our society", but added that it was committed to "promoting the responsible use of coal".

To support the new policy, BoA said it would also step up its support for the development of carbon capture and storage technologies, and would be issuing a $1m (£681,000) grant to the Harvard University Center for the Environment to help fund the development of a new CCS Action Plan designed to address how the technology should be financed and what regulations should govern its use.

Meanwhile, HSBC backed up its commitment to the Climate Principles by announcing that it was to scale back its funding for forestry-related projects in Malaysia and Indonesia and undertake a review of its policy on contrioversial Canadian oil sands projects.

Click here to read more

Source: Businessgreen.com