Earlier this month Wells Fargo announced its intention to significantly increase investment in projects aiming at a ‘greener economy’. The measures announced are welcome and positive in themselves and come a month after the publication of the company’s 2011 Environmental Finance Report.
HarryCjr / CC BY-NC-ND 2.0
Chairman, President and CEO John Stumpf:
“Our commitment to the environment reflects our belief that Wells Fargo’s responsibility as a corporation goes beyond its mission of helping customers succeed financially. We also have a major role to play in promoting the long-term economic prosperity and quality of life of the communities we serve. By bringing our talents and resources to these efforts, we seek to work jointly with businesses and communities in protecting and preserving this planet and its precious resources for future generations.”
Mary Wenzel, Wells Fargo’s director of Environmental Affairs:
“Our research shows more than 80 percent of our consumers think environmental issues are important. We share their values and concerns and are acting on them through a broad-based, financially powerful approach to the environmental opportunities and needs we see on the horizon. We hope to demonstrate that progress for Wells Fargo and for the communities we serve does not have to come at the expense of the planet we share.”
Included in the announcement are: $30+ billion in loans and investments, $100 million in community grants, paperless banking services, financing for energy efficient home improvements and “new approaches to environmental and social risk management focused on responsible ways of doing business together with our business customers.”
These are statements and pledges to action which are exactly what the green business community needs to increase confidence. If it comes with a gradual reduction in support for unsustainable and environmentally destructive practices then so much the better.
80 percent of consumers respond positively to questions about the importance of environmental issues. 100% percent of consumers need to know that what they are doing and how they do it can sustain their children and their children’s children into the future. Protecting the planet we live on is an obvious requirement for long-term prosperity. The question is how? What the person going about their daily business needs to know and believe in is the long-term viability of green policies. Commitment through investment from leading financial institutions gives exactly the message they need to hear.
Rainforest Action Network / CC BY-NC 2.0
Wells Fargo, along with many other US banks have been under pressure in recent years for their financing of the coal industry and particularly the practice known as mountain top removal (MTR) mining. This news release coincides with a document from the Environmental Affairs department which defends their relationship with the coal industry and their efforts to move towards best practice and support their customers through what they see as a transition period:
Wells Fargo recognizes the significant environmental, legal, regulatory, financial, and reputational risks facing the mining industry. To manage these risks we have established a credit policy and published related internal guidance for coal and metal mining lending transactions.
Recent regulations and market conditions have significantly impacted the power generation industry, including decisions about fuel sources for future power generation
projects and about plant retirements of existing assets. We have entered a transition period where the majority of baseload power plants developed in the U.S. are now natural gas-fired, and utility scale and distributed renewable generation is becoming a more significant component of our energy mix. Currently, solar, wind and other renewable resources account for only 4.7 percent of annual electricity generation (excluding large hydro generation) in the U.S. During our country’s transition to cleaner sources of energy, we will continue to support our customers in the power and utilities industry to meet new regulations.
In their 2011 Environmental Finance Report Wells Fargo tell us:
Wells Fargo has deployed more than $11.7 billion in environmental loans and investments since 2005. This includes more than $3.8 billion in debt and equity commitments to renewable energy projects across the U.S., nearly $2.1 billion to support customers who have made environmentally beneficial products and services a core part of their businesses, and more than $5.8 billion in construction or term financing for buildings that have received or are designed to receive LEED certification.
The company blog also highlights the Environmental Finance report quoting the following for 2011:
- Approximately $450 million in capital deployed to solar photovoltaic projects, doubling total investment in the sector to more than $900 million
- Approximately $200 million in wind project investments, increasing total wind investment to date to more than $1.6 billion
- Over $1.5 billion in loans to LEED®-certified commercial buildings and community development projects
- More than $150 million in loans to commercial banking and community banking cleantech customers
In the context of these figures, the announcement of investment in the order of $30 billion shows significantly increased commitment, presumably based, at least in part, on the success of past investments. It would be interesting to see figures relating to those investments and expected returns. The more that both businesses and banks can demonstrate the economic benefit of investment in green business the stronger the case for reduction in support for environmentally destructive practices becomes. It is the big financial institutions which have the power to help companies navigate the difficult waters of such transitions as a move from coal to renewable energy sources.
Of course we must look forward to the day when it is not necessary to publish separate ‘environmental’ financial plans and figures. However, until that time, announcements like this one must be warmly welcomed.