PNC Bank’s Evolving Approach To The Energy Sector

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PNC's Planned Skyscraper

Image via PNC Financial Services Group

PNC recently released their 2011 Corporate Responsibility Report. Documents like this  provide a window into how a bank thinks about its environmental and social impact. RAN has been paying close attention to PNC Bank and its approach to the energy industry for a couple of years, so I was eager to get my hands on the new report and see whether PNC is strengthening its commitment to communities and the environment.

The most eye-catching announcement in the introduction is the announcement that PNC will be building the “World’s Greenest Skyscraper” right in the heart of Pittsburgh. Avid readers of the Understory might recall that, in 2009, PNC built the “largest green wall in North America.” This is a commendable step-up in ambition. Extrapolating this trend, I look forward to PNC building the greenest city in the U.S. in 2013 and, before the decade concludes, PNC might just transform this nation to become the greenest on the planet.

But seriously, RAN has been saying for years that, while we like to see corporations green-up their buildings and their operational practices, the true test of a “sustainable” bank is where it puts its money.

If you compare this report to PNC’s first, released in 2010, there is a striking shift in the language used. Whereas previously PNC spoke of “Lending in support of economic growth,” now the message is “Lending to drive growth responsibly.” I’m hearing an acknowledgement of both the tough times we are living in and the role that the unchecked pursuit of profit has played to get us into this unsustainable economic crisis.

On page two, PNC gives an interesting trend analysis of energy sources. While the report doesn’t specifically say that PNC will be moving away from financing coal and oil, it does note that fossil fuels (except natural gas of course) are becoming less attractive as energy sources. I would like to see PNC disclose how its portfolio of energy investments compares to the national energy trends. The bank sounds enthusiastic about “deepening and broadening relationships” with those seeking to develop solar and other energy-efficient projects. However, there is no target stated indicating the level of financing that PNC is aspiring to provide.

PNC Green Wall

Photo by Doug Bardwell

On page three, a new “supplemental due diligence criteria” is outlined that appears to apply to all companies in extractive industries. There is specific mention of “horizontal drilling and hydraulic fracturing methods.” I suspect these are being addressed because of the bank head office being located in Pittsburgh, where hydrofracking has been banned. I like the broad category of “extractive industries,” but there isn’t much here about what this criteria looks like, and no mention of reporting.

PNC has restated its policy on mountaintop removal (MTR) mining. There is no change here and I have the same criticism as before: This policy has an identified performance standard — “coal producers who receive a majority of their production from MTR mining” — and it is unclear whether this refers to a company’s performance in Appalachia or across the United States. Prior to adopting this policy, PNC had substantial exposure to MTR companies and I would like to see PNC publicly report on the impact of the policy, as its competitors Citi and Morgan Stanley are now doing.

In summary, the 2011 PNC Corporate Responsibility Report demonstrates that this bank’s approach to energy is evolving. But there is still plenty of room to improve transparency around targets and reporting on implementation, and for PNC to be as ambitious with energy underwriting as it is with building green skyscrapers.

3 Comments For This Post I'd Love to Hear Yours!

  1. Martin Mudd says:

    The land and people of Appalachia, as well as everyone who lives downstream, do not have time for half-measures and corporate greenwashing. The health of our friends and our mountains and our streams are being destroyed by the profit-driven abomination of surface mining, bankrolled by big banks like PNC and Chase. Thank you RAN, for keeping their feet to the fire.

    Speaking for the hell-raisers of Kentucky: we will not stop raising hell for the big banks, the corrupt politicians, and all purveyors of ecological and social destruction until they stop their crimes.

    Business as usual is no longer acceptable, and the 99% are prepared to begin disrupting that business unless appropriate action is taken post-haste.

  2. Ingrid Lakey says:

    I am part of a group, Earth Quaker Action Team or EQAT, that has been pushing PNC to create a meaningful policy around mountaintop removal. Green buildings are well and good but PNC could provide REAL leadership by going further than the current policy. We have also been trying to find out what (if any) difference PNC’s policy has made to the ongoing MTR destruction in Appalachia.

    PNC could create a sector exclusion policy. In other words, they could decide that they will not provide financing for any company that does mountaintop removal coal mining.

    13 of us went to the PNC Shareholder meeting in April and challenged PNC President James Rohr about the current policy. He claims they don’t want to take jobs away from Appalachia. Well, neither do we. But again, here’s a chance for REAL leadership…PNC could finance companies developing renewable energy sources in Appalachia. There are some great groups working to create alternative economies in Appalachia. With only 20 years of recoverable coal left in those mountains, that’s the only way for there to be a future for communities in Appalachia.

    So come on PNC, don’t be satisfied with having the world’s greenest skyscraper. At a time when the American people are disgusted with banks for a host of reasons, you have a chance to stand out and lead the way to a greener future for us all!

  3. Carolyn McCoy says:

    I am disappointed in this CSR report because of the lack of change in regard to funding MTR, and the lack of reporting about the impact of the policy first published last October. I have grave doubts about the impact of a policy that allows a company obtaining up to 49% of its production from MTR to be funded by PNC.

    If there is a reason to restrict funding for MTR (which PNC indicates there is, by creating a policy), why is it acceptable to fund it at all?

    The creation of a policy regarding MTR was a good step in the right direction, but they haven’t gone far enough. In fact, it’s possible the policy hasn’t restricted their financial activities at all, and that is shameful.

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