Leading U.S. banks leave ESG project finance group

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JP Morgan Chase & Co sign outside headquarters in New York
A sign outside the headquarters of JP Morgan Chase & Co in New York, September 19, 2013. REUTERS/Mike Segar/File Photo Purchase Licensing Rights, opens new tab
  • No longer signed up to Equator Principles
  • EP helps identify, manage environmental, social risk
  • "A very troubling move" - Stand.Earth's Brooks
LONDON/NEW YORK/BOSTON, March 5 (Reuters) - Four of the biggest U.S. banks are no longer signatories to the Equator Principles, an industry benchmark for assessing environmental and social risks in project-related finance, its website showed on Tuesday.
Set up by the banking industry in 2003, the principles help firms identify, assess and manage potentially adverse impacts created by large infrastructure and industrial projects.
Spokespeople for JPMorgan (JPM.N), opens new tab, Citi (C.N), opens new tab, Bank of America (BAC.N), opens new tab and Wells Fargo (WFC.N), opens new tab, all said their banks would continue to be informed by those principles.
The departures are the latest example of major financial services companies leaving corporate environmental initiatives since U.S. Republican politicians started suggesting participation could breach antitrust rules.
There are currently 10 principles, opens new tab for aspects of projects ranging from initial due diligence to grievance mechanisms.
Asked about their departures, Citi and Wells Fargo cited a restructuring by the organization.
"Wells Fargo’s due diligence process will incorporate consideration of the Equator Principles for project financing, where we deem appropriate," the bank said in a statement sent by a representative.
A Citi representative said via e-mail that "Our commitment to implementing best practices in our evaluation of environmental and social risks in project-related finance transactions has not changed."
A JPMorgan spokesperson said the bank had invested in environmental and social risk experts and in-house processes, meaning it was not necessary to maintain membership, although its in-house standards would stay aligned with the principles.
"While we may collaborate with coalitions or join organizations to further our goals, we always maintain our autonomy and are never bound by third-party dictates or approvals," the spokesperson added.
Bank of America said in a statement that the objectives of the Equator Principles would stay in their risk policy framework, which refers to the bank's "ability to make independent risk decisions about clients and transactions."
A spokesperson for the Equator Principles declined to comment further.
Richard Brooks, climate finance director at environmental conservation nonprofit Stand.Earth, said the banks had moved to "abandon a bare minimum set of standards which banks themselves have set."

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Reporting by Simon Jessop, Ross Kerber and Isla Binnie; Editing by Tommy Reggiori Wilkes, Jonathan Oatis and Aurora Ellis

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Simon leads a team tracking how the financial system and companies more broadly are responding to the challenges posed by climate change, nature loss and other environmental, social and governance (ESG) issues including diversity and inclusion.

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Isla Binnie reports on how company directors and executives manage stakeholder and shareholder interests, with a focus on compensation, corporate crises, dealmaking and succession. She also covers how politics, regulation, environmental issues and the broader economy affect boardroom discussions. Isla previously covered business, politics and general news in Spain and Italy. She trained with Reuters in London and covered emerging markets debt for the International Financing Review (IFR).

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Ross Kerber is U.S. Sustainable Business Correspondent for Reuters News, a beat he created to cover investors’ growing concern for environmental, social and governance (ESG) issues, and the response from executives and policymakers. Ross joined Reuters in 2009 after a decade at The Boston Globe and has written on topics including proxy voting by the largest asset managers, the corporate response to social movements like Black Lives Matter, and the backlash to ESG efforts by conservatives. He writes the weekly Reuters Sustainable Finance Newsletter.

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