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ABOUT Climate Counts
Climate Counts is a collaborative effort to bring consumers and companies together in the fight against global climate change.
We score the worlds largest companies on their climate impact to spur corporate climate responsibility and conscious consumption. Our goal is to motivate deeper awareness among consumers -- that the issue of climate change demands their attention, and that they have the power to support companies that take climate change seriously and avoid those that dont.
Wells Fargo “Green Economy” Pledge Signals Shifting Tide
When lending institutions (like banks) trumpet their commitment to environmental stewardship, they find themselves subject to the proverbial “sniff” test. It is one thing, for example, to offer paperless banking as a means of satisfying the eco-conscious consumer, but it requires a much higher degree of commitment to, say, discontinue financing of mountaintop removal (MTR) as a means of extracting coal.
On April 23, Wells Fargo announced an “enhanced commitment to environmental leadership through a series of goals to be achieved by 2020 including: $30 billion in loans and investments in support of a “greener” economy, $100 million in community grants for grassroots environmental initiatives, and a 40% increase in the company’s energy efficiency. With these ambitious targets, Wells’ is indeed showing a commitment to investing in a green economy.
Underlying these targets, however, is the signal of a much larger shift in how the bank approaches its lending practices; one that is both strategic and transparent in nature.
Although Wells Fargo has never been seen as a major culprit in financing strip mining and dirty coal energy (PNC, Citi and UBS take the title on that front), they have nonetheless identified the need to modify their approach to what is increasingly becoming a poster child for global climate change. To this end, the company earns modest points for what it calls environmental and socially responsible lending (PDF).
The new approach outlined for coal and metal mining, for instance, requires an “enhanced due diligence process, including evaluation of a company’s track record regarding litigation, regulatory compliance, worker safety and environmental compliance; and the degree of organizational capacity and commitment the company dedicates to these concerns.”
This signals a more head-on approach to what has traditionally been considered a taboo subject. Sure coal is dirty and bad for the climate, but the reality of having any renewable energy source take its place in the near term is illogical. What Wells is attempting to do is say, “OK, we realize that there are certain negative drawbacks to financing coal, so we’ll take more precautions, but there is still enough of a business case for us to do it.”
In a report released late last year entitled Bankrolling Climate Change: A Look into the Portfolios of the World’s Largest Banks, Wells Fargo was ranked 19 out of 93 major banks with $5.9 billion of financing in coal mining and coal fired electricity from 2005 to 2011.
To whatever degree Wells has invested in coal fired energy in the past, however, there seems to be a conscious change of tact in how they go about it with their latest environmental commitments. In a statement regarding their environmental affairs, the company has stated that “Wells Fargo seeks to ensure that as we do business, natural resources are protected and environmental, social and economic needs are part of our everyday decisions. In this integrated approach to sustainability, we are committed to finding new ways to minimize our energy consumption, address climate change, use renewable sources, and inspire others to do the same so we can lower our impact on the planet.”
Climate Counts, a nonprofit organization that rates companies on their climate leadership, most recently scored Wells Fargo at a “starting” 49 out of 100 points.
In terms of sniff test, Wells Fargo may not smell the best, but their investments in a green economy are absolutely a step in the right direction.