Financial Sector's ESG Concerns Affect Investment in Extractive Sector

Financial Sector's ESG Concerns Affect Investment in Extractive Sector

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Financial groups consider environmental, social + governmental issues in investment decisions via @3blmedia #CSRmin
Monday, March 30, 2015 - 4:45pm


CONTENT: Multimedia with summary

The greening of the finance sector is leading to a credit squeeze in the extractive industry. That’s the conclusion of a recent report on Mondaq, a website that provides global coverage of legal, financial, and regulatory issues. The current climate of controversy about oil sands extraction in Canada, coal-fired power plants in the U.S., and conflict metals and minerals in Africa is causing financial entities to increasingly consider environmental, social, and governmental issues in their investment decision-making process. For example, a long list of U.S. financial institutions have distanced themselves from coal companies involved in mountain top removal: PNC Financial has recently joined Bank of America, Citigroup, Morgan Stanley, JP Morgan Chase, Wells Fargo, Credit Suisse, and others in stepping back from making the large and numerous investments that they had historically provided.

A study from the Harvard Kennedy School finds that frequent and substantial costs of company-community conflict in the extractive sector come from lost productivity due to temporary shutdowns or delay. These environmentally related costs, plus the reputational costs among the broader group of stakeholders, are causing both investors and companies to integrate ESG issues into their core business practices and strategies.

I’m John Howell for 3BL Media.

Video source: Financial Sector’s ESG Concerns Affect Investment in Extractive Sector