Earlier this month, I did a blog entry looking at the massive impact that climate change will have on the financial services sector, particularly the banks.
Now, global law firm Winston & Strawn has put out a briefing paper on the carbon principles being championed by Citibank, JPMorgan Chase, and Morgan Stanley working in conjunction with various power companies. According to the principles, the aim is to encourage companies to invest in renewable energy and carbon technology. The principles are however a bit vague when it comes to dealing with certain industries, like power plants. Significantly, it seems to make no distinction between natural gas, coal or nuclear plants.
The principles don't preclude financing of projects producing greenhouse gas emissions. But they are likely to force these industries to look more carefully at what they do and find ways to address the issue.
And bank clients who won't provide the information required to conduct what the principles call the enhanced diligence process will be denied financing.
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