Big Banks Ditch Mountaintop Removal Coal Mining

It's an encouraging sign for sustainable business when the four largest banks in the US discontinue support for one of the world's most destructive mining practices, in a shift to more environmentally friendly projects. As of last month Citi, Bank of America, JPMorgan Chase, and Wells Fargo—the big four of US banking—have designed policies to reduce their financing of highly destructive mountaintop removal coal mining. Two other banks, Morgan Stanley and Credit Suisse, have joined the big four in adopting similar policies. It appears a genuine industry-wide shift is occurring, with more and more banks showing themselves unwilling to finance this dirty form of mining.

This move to reduce spending for the non-sustainable business of mountaintop removal didn't happen without a fight. Indeed the string of events that led to it provides a great example of how intense public pressure and strategic actions on the part of nonprofits can prompt large companies to do business better. The largest US banks adopted their anti-mountaintop removal policies only after more than two years of pressure from environmental groups, most notably the San Francisco-based Rainforest Action Network (RAN).

In 2007, RAN determined that the banking industry's willingness to finance mountaintop removal—a practice during which the tops of mountains in the eastern US are literally blown off to expose hidden coal seams—was a major factor allowing the practice to continue. By targeting these banks, RAN organizers hoped to reduce environmental destruction in Appalachia while simultaneously keeping carbon emissions associated with burning coal out of the atmosphere. In 2007 the group launched campaigns to end Bank of America and Citi's funding of the practice. After scoring victories with those companies, RAN moved on to other players in the banking industry.

It took more than a year to see concrete results from one of the big four banks, but in December of 2008 Bank of America rolled out new principles to guide its financing of mining projects. Like the policies adopted by other banks, Bank of America's guidelines probably won't end every contribution the company makes to mountaintop removal—but these policies have helped push funding away from mining companies that do a large amount of mountaintop removal. A case in point is Massey Energy, a corporation long regarded as the poster child for destructive coal mining in Appalachia. Previously banks like Wells Fargo and Bank of America were major financers of Massey Energy's projects, but they have now cut ties with the company altogether.

As the largest banks in the country have shifted to funding more sustainable business, Massey and other mountaintop removal companies have unsurprisingly sought out other sources of financing. According to RAN, the two banks underwriting the most mountaintop removal projects today are PNC, and the Swiss-based bank UBS. Now that other financial institutions have begun steering away from mountaintop removal, it seems likely these banks will feel increased pressure from environmental groups and consumers.

What do you think? Are more banks likely to cut their ties to mountaintop removal coal mining, as public pressure to do so increases?

Photo credit: Omar Barcena

Nick Engelfried is a freelance writer on climate and energy issues, and works with campuses and communities in the Pacific Northwest to reduce the causes of climate change.