Banking giants develop ‘The Carbon Principles’

Three of the world’s biggest banks have drafted the framework for assessing carbon risks in the financing of coal-fired power plant projects.

Clearly, they don’t want to fund a coal project then have it blow up in their faces some years down the line due to increased carbon emission regulation. While they’re doing it to protect themselves, such a stance would have been unthinkable just a year or two ago. It also signals a major warning for big coal. The investment banks are no longer particularly interested in funding coal. And they get it about renewables.

Under the principles, financial institutions will encourage energy efficiency for potential clients, as well as cost-effective renewable energy projects. The principles also call for banks to promote carbon capture and storage technologies.

This also means investment banks are now interested in funding renewables. Good. May they forget the CDOs and SIVs that benefited few and created nothing except pain and instead invest in something that benefits everyone.