Bank Adopts 'Green' Lending Policies

J.P. Morgan Adopts 'Green' Lending Policies

"J.P. Morgan Adopts 'Green' Lending Policies
By Jim Carlton, Staff Reporter of THE WALL STREET JOURNAL, April 25, 2005; Page B1

Following pressure by ecological activists and shareholder groups, J.P. Morgan Chase & Co. will adopt sweeping guidelines that restrict its lending and underwriting practices for industrial projects that are likely to have an environmental impact.

The New York banking giant -- third largest in assets in the U.S. -- is expected to issue a 10-page environmental policy today that takes an aggressive stance on global warming, including tying carbon-dioxide emissions to its loan-review process for power plants and other large polluters. The bank also plans to calculate in loan reviews the financial cost of greenhouse-gas emissions, such as the risk of a company losing business to a competitor with lower emissions because it has a better public standing.

And J.P. Morgan plans to lobby the U.S. government to adopt a national policy on greenhouse-gas emissions, becoming the first big American bank to pledge that kind of activism on such a contentious issue, according to shareholder activists.

The bank's move, on the heels of activist campaigns that produced similar pledges from Citigroup Inc. and Bank of America Corp., suggest that a shift in tactics by the environmental movement is paying off. Green groups have largely failed in efforts to lobby the Bush administration on oil drilling and other issues. So they are pressuring corporations directly, hoping to counter business activity that could harm the environment.

Large banks are a particularly important target because of their potential role in financing activity such as energy development and logging. By agreeing to put some limits on lending, banks could forgo some profitable activity. But activists argue that eco-friendly policies can help banks sidestep loan defaults and costly litigation associated with businesses such as logging and mining.

'This is increasingly becoming the way all banks operate,' says Steve Lippman, vice president of social research at Trillium Asset Management, a socially oriented investment firm based in Boston that helped lobby J.P. Morgan. 'J.P. Morgan is now raising the bar for the sector.'"

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