Some of the world’s biggest polluters are reaping billions of dollars through a lax form of green finance, a new investigation by The Examination has found.
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In the last several years, banks gave out more than $286 billion in these SLLs to hundreds of companies in environmentally damaging industries, including fossil fuels, mining and companies linked to significant deforestation, an investigation by The Examination, Toronto Star and Mississippi Today has found. That’s nearly 1 in 5 dollars out of all SLLs, the team’s analysis of data from the London Stock Exchange Group from 2018 to 2023 showed.
U.K.-based Drax has gotten a series of SLLs linked to producing cleaner energy as it shifts from burning fossil fuels to burning wood pellets — even though researchers say such a switch is worse for the climate. Drax is making plans to expand its wood biomass operations across the U.S. Banks get several benefits from issuing SLLs: They lock in massive multiyear deals with major corporations and typically count these loans toward their own public targets for sustainable lending.
“Royal Bank of Canada is proud to have worked with our clients in recent years to deliver innovative financial solutions including sustainable finance,” the bank said in a statement, adding that its criteria for this financing were in “alignment with widely accepted global and Canadian industry standards.”Drax Group, which reported more than $10 billion in revenue in 2023, brands itself as a leader in renewable energy.
Drax is one of dozens of companies in the wood biomass industry — which burns wood and wood waste products to produce energy — that have taken advantage of SLLs. The United Kingdom and European Union have embraced this logic, classifying wood bioenergy as renewable and carbon neutral and relying on it to meet national climate goals.This carbon accounting escape clause — endorsed by the United Nations Framework Convention on Climate Change — has allowed the U.K. and Europe to claim emissions cuts based on production of wood pellets at factories that pollute in America.
“Wood bioenergy is harmful and it actually makes climate change worse,” Sterman, an expert on corporate environmental practices, told The Examination. “It’s actively moving us in the wrong direction.” The company didn’t credit the escape clause that allows it to ignore massive emissions from burning wood.
More than half a dozen Gloster residents recently told The Examination that since the Drax plant opened in 2016, they’ve noticed a bad smell coming from the factory — comparing it to rotten eggs — and that they have developed shortness of breath or asthma. Krystal Martin, a community leader in Gloster who has spearheaded opposition to Drax, said the screen is a decade too late.from the National Institute of Environmental Health Sciences to study what is making people in Gloster sick and whether pollution from Drax’s facility is responsible.
In May, the investment manager for the United Methodist Church — which had invested with Barclays — blasted the bank for financing “totally dishonest” SLLs to fossil fuel companies, A July 2024 report by Moody’s Ratings, one of the biggest credit rating agencies, also found SLLs to be less effective in boosting sustainability than other types of loans. Moody’s found that only 42% of SLLs that it had rated received high sustainability quality scores. In contrast, 88% of loans used directly for green projects scored highly.
“There are choices being made here to continue to do business as usual and add a green veneer to it,” said Brooks, of the environmental group Stand.Earth.In November 2020, Enbridge won permission from Minnesota to replace an aging pipeline carrying Canadian oil through the state, doubling its capacity at the time. Called Line 3, the pipeline would carry tar sands oil from Alberta.
Environmentalists say that the expansion opened the door to a surge in the production of tar sands, posing an even bigger threat to the climate. Enbridge’s indirect emissions, primarily from the use of its fuels, increased to nearly 55 million tons in 2023 from about 50 million tons when it received its loan two years earlier, according to its annual Sustainability Report.
“If Line 3 did not exist, the products it carries would be transported by more carbon intense transportation modes,” the company said. Shell said it has met its short-term goals for reducing emissions intensity and also has targets for reducing emissions from its operations.Royal Golden Eagle, an Indonesian forestry conglomerate with more than $35 billion in assets, committed to a “zero deforestation” policy in 2015, and in recent years, the group has sought to remake itself as a leader in sustainability.
Alex Rozier Richard Brooks Financial Services Renewable Energy Green Technology Mississippi Minnesota Sumatra General News MS State Wire Arcelormittal SA Business Carmella Causey Sasha Chavkin Enbridge Inc. Keith Stewart U.S. News Bank Of America Corp. Tess Virmani John Sterman Moodys Corp. Technology Rachel Auslander World News Daniel Nass Jpmorgan Chase Co. Robert Cribb Barclays PLC Alejandra Saavedra Lopez Krystal Martin Wells Fargo Co. Alex Helan Climate And Environment World News U.S. News
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