Wall Street banks release green guidelines for investors

Three of the top Wall Street banks - Citi, JPMorgan Chase, and Morgan Stanley - released guidelines this week for those who lend money to power companies in the United States.

The guidelines, called ‘The Carbon Principles’, were drawn up over a period of nine months, and investors to evaluate the carbon risks in financing electric power products.

The guidelines advise lenders to encourage power companies to invest in energy efficiency, renewables, and low-carbon technologies, as well as pushing for changes in the regulation and legislation barriers to such investment.

However, the guidelines permit investment in conventional energy such as natural gas, coal, and nuclear, so long as the financial and environmental risks of these investments are taken into account.

Sustainable Finance Ltd helped to co-ordinate the development of the guidelines. Their director of environmental advisers, Matt Arnold, said: “There was a remarkable amount of debate and exchange of information and views among the banks, power companies and environmental organisations.

“This resulted in a rigorous analysis of the carbon risks in power investments and sets the stage for further discussions.”

Power companies involved in the discussions have weclomed the guidelines. Environmental groups are more skeptical about their potential impact.

The Rainforest Action Network (RAN) has said that the guidelines are an important step, but are severely limited by their lack of binding commitments.

Director of RAN’s Global Finance Campaign, Rebecca Tarbotton, said of the Carbon Principles: “Calling them The Carbon Principles is an overstatement.

“A serious climate change policy would commit the banks to emissions reductions in their financing and extend beyond coal into other carbon-intensive sectors such as coal mining and the oil and transportation industries.”