September 1, 2010

Wall St. Rejects Mountaintop Removal Mining

It's nice to see major banks acting in the best interests of us all here. This example of CSR harm avoidance is a fascinating case, generalizable to many other issues, namely, agricultural (pesticide use), livestock (factory farm waste), dietary (junk food and obesity), and transportation (C02 emissions):
"Several large commercial lenders are taking a stand on industry practices that they regard as risky to their reputations and bottom lines.

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.”

The bank was a small player in the sector, representing about $78 million in bonds and loan financing for such companies from 2008 to April of this year, according to data compiled by the Rainforest Action Network, an environmental group tracking the issue.

But the policy shift by Wells Fargo follows others over the last two years, including moves by Credit Suisse, Morgan Stanley, JPMorgan Chase, Bank of America and Citibank, to increase scrutiny of lending to companies involved in mountaintop removal — or to end the lending altogether....

Global warming, along with increasing scrutiny by environmental groups of banks’ investments in many other industries — like oil and gas development, nuclear power, coal-fired electricity generation, oil sands, fuel pipeline construction, dam building, forestry and even certain types of agriculture — are nudging lenders into new territory.

“We’re taking a much closer look at a much broader variety of issues, not all of which are captured under state and local laws,” said Stephanie Rico, a spokeswoman for the environmental affairs group at Wells Fargo" (NYT 9/1/10).

This is definitely a step in the right direction and I look forward to seeing more examples of banks divesting from socially and environmentally harmful activities. But ultimately, banks truly concerned with being good corporate citizens shouldn't limit themselves to harm avoidance. They should also begin taking proactive positions on these issues by supporting green venturing and social entrepreneurs. Lending to benefit corporations at a discount would be a good start.

Activists using corporate campaigns can do much to pressure third parties such as banks by threatening or organizing boycotts, as the Service Employees' Union (SEIU) succeeded in order to raise the minimum wage of its Houston members.

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