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Are Your Investment Advisor’s Fees Going to Coal Mining?

coal miningIf you currently have an account with one of the large brokerage firms out there like Morgan Stanley or Chase, you may  think, “oh well my small amount of assets can’t amount to these companies doing harm to the planet”. Well, think again. These same companies offering you free golf balls and “unbiased” investment advice  are also lending millions if not billions to the largest source of CO2 in the world, coal.

 
Coal plants are the nation’s top source of carbon dioxide (CO2) emissions, the primary cause of global warming. The US still accounts for 20% of the world’s coal production with China ranking first producing 40% of the world’s use. Burning coal is also a leading cause of smog, acid rain, and toxic air pollution. Some emissions can be significantly reduced with readily available pollution controls, but most U.S. coal plants have not installed these technologies. This leads me to my first point. Who is actually lending money to these coal companies to stay in business? Shouldn’t they all be going out of business? While the state of CA has cut coal production by 35% since 10 years ago, states like Texas and Arkansas have seen double digit growth.

 
This fifth annual Coal Finance Report Card published by Rainforest Action Network, the Sierra Club, and BankTrack, assesses the impacts of the banking industry’s financing of the coal industry. These extreme investments have yielded extreme consequences ranging from spills of coal ash that contaminated public water supplies to bankruptcies that left banks on the hook for hundreds of millions of dollars. In 2013, investment banks poured $31.7 billion in financing into the worst-of-the-worst U.S. coal mining and coal-fired power companies. In spite of reports from top global investment banks that found the financial case for investment in coal to be crumbling, U.S. banks led 50 loan and bond transactions with coal companies that practice mountaintop removal (MTR) mining and electric power producers that operate large coal-fired power plant fleets.

 
The report’s grades and league tables highlight how some banks, including Wells Fargo, took steps to reduce their exposure to the coal industry by phasing out financing relationships with the largest producers of mountaintop removal coal, becoming the first U.S. banks since the first Report Card was published in 2010 to earn a “B” grade.

 
However, other banks, including Barclays (#1 in financing of mountaintop removal coal companies in 2013 with $550 million) and Citigroup (#1 in financing of coal-fired power companies in 2013 with $6.5 billion) and Morgan Stanley (D+) deepened or maintained strong ties to the coal industry.Banking and having your investment accounts with independent firms such as Sustainvest Asset Management can keep those assets and advisory fees away from going towards issues that may not align with your conscious.