PNC’s 2015 Corporate Social Responsibility Report: Progress, But the Time for Incremental Steps on Climate and Coal is Over
This week, PNC Financial released their 2015 CSR Report. Last year was an eventful one for PNC on climate and coal, with the bank announcing a commitment to transition away from financing mountaintop removal coal mining. The report notes that the bank devoted considerable energy last year to develop environmental risk management practices and analyze how climate risk will impact its business. At the same time, 2015 was a milestone year for climate and energy. With the global agreement reached in Paris to hold climate change to 1.5 degrees centigrade, PNC’s incremental progress on coal and climate change, though encouraging, does not go nearly far enough.
Here is RAN’s assessment of the bank’s 2015 CSR Report:
Reporting on the implementation of their mountaintop removal commitment - PNC reported that as part of their commitment to transition away from financing companies that engage in mountaintop removal (MTR), the bank’s credit exposure to firms engaged in MTR dropped 22 percent in 2015. PNC also disclosed that it did not extend any new financing to MTR producers last year. Although RAN has called for banks to immediately exit their MTR financing relationships, PNC’s reporting on implementation of this commitment is a positive model for other banks with similar commitments.
- New human rights due diligence framework - This week, PNC adopted human rights due diligence standards for the coal mining and electric power sectors. These address labor rights, worker safety, and respect for the rights of indigenous peoples to free, prior, and informed consent, among other human rights issues. As next steps on human rights, RAN encourages PNC to report on the implementation of this framework and further align the bank’s policies and practices with the U.N. Guiding Principles on Business and Human Rights and other core international human rights standards.
New due diligence and environmental risk processes - PNC has implemented new systems for assessing environmental impacts of clients in high-risk industries and assessing overall environmental risk in its credit portfolio. These are important first steps toward aligning the bank’s financing practices with environmental sustainability and community accountability.
PNC’s competitors have raised the bar on moving away from coal mining finance - In the months after PNC published its commitment to exit MTR finance last March, four of the six largest U.S. banks went further, committing to move away from financing the entire global coal mining sector. With this new consensus among U.S. banks on coal finance, it’s time for PNC to meet and exceed coal-related commitments by its competitors.
PNC’s commitment on financing coal-fired power misses the mark - PNC’s CSR report mentions the company’s adoption of a policy on coal-fired power in 2015, which limits financing for new coal power plants to plants with advanced emissions control technology. But with the urgent need to transition away from coal-fired power globally, the construction of any new coal-fired power plants is incompatible with stabilizing the climate. In addition, it will be critical for PNC to demand that its power sector clients with existing coal-fired power capacity rapidly transition away from coal as an energy source.
Risk management vs. climate leadership approach - Overall, PNC’s approach to energy finance outlined in its CSR report focuses on managing financial risks to the bank rather than addressing the consequences of PNC’s financing decisions on climate change. As other leading global banks have begun to explicitly link their overall business and financing strategies to climate stabilization targets, it’s time for PNC to do the same.
What Sustainability Leadership on Energy Would Look Like for PNC in 2016
With time running out for holding climate change to 1.5 (or even 2) degrees, the incremental improvements spotlighted by PNC’s 2015 CSR report do not address the scale of the challenge posed by climate change. For 2016, sustainability leadership for PNC must involve aligning its own strategies with global standards and best practices. In terms of its recently-adopted human rights due diligence practices, this would mean further steps to anchor PNC’s commitments in the framework established by the United Nations Guiding Principles on Business and Human Rights and other core international human rights standards. And on climate change, leadership would mean aligning the bank’s energy financing goals and practices with the climate stabilization goals laid out by the Paris Agreement last December. And on climate change, leadership would mean aligning the bank’s energy financing goals and practices with the climate stabilization goals laid out by the Paris Agreement last December.