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Some of the world’s biggest banks are making it increasingly difficult for companies involved in controversial industries to get project funding, claims independent market analyst, Datamonitor
Datamonitor has found that growing environmental scrutiny is making it harder for lenders to finance polluting industries without suffering a blow to their reputation.
Daniel Jones, energy and sustainability analyst at Datamonitor, comments: “There are examples of this already happening. Wells Fargo, for example, is moving away from companies involved in mountaintop removal (MTR) mining to reach coal seams in the Appalachian mountains of North America.
“It has cited increased risk to its reputation and bottom line coming as a result of rising attention and controversy from environmentalists as the reason behind its decision to scale back its $78m stake in companies operating in the sector.”
Other industries that could see an exodus of funding from the world’s biggest lenders include oil and gas, nuclear power, coal-fired electricity generation, oil sands and dam-building.
Daniel adds: “Some are taking this to be a realization by these banks that they have an important role to play in helping to raise global environmental standards, and that they are now aggressively looking at opportunities presented by greener lending.”
However, Datamonitor does not believe this signifies improved lending for green ventures.
“A key reason for the shift away from energy infrastructure projects is the volatile state that the traditional energy market has been in since the global downturn. It only makes sense for banks to back a company in a stable industry that can guarantee a return over a prolonged period; if the renewable energy sector doesn’t fit into this category then there is no guarantee that it will get the money that traditionally went to coal and oil” concludes Daniel.
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The Datamonitor Group (www.datamonitor.com) is a world-leading provider of premium global business information, delivering independent data, analysis and opinion across the Automotive, Consumer Markets, Energy & Utilities, Financial Services, Logistics & Express, Pharmaceutical & Healthcare, Retail, Sourcing, Technology and Telecoms industries. Combining our industry knowledge and experience, we assist more than 6,000 of the world’s leading companies in making better strategic and operational decisions.
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