Katerina Swanson
PNC Financial Services has been ranked among the top 3 worst offenders in the US for financing fossil fuel companies. Despite declaring in 2015 that it would move out of coal and no longer fund new coal-fired power plants, the bank invested a total of $496 million in fossil fuels between 2014 and 2017. PNC also holds 22.4% of shares in BlackRock, the biggest financier of fossil fuel companies globally. The bank's actions contradict its claims of committing to sustainable financing and violate the terms of the Paris Agreement on climate change.
| Characteristics | Values |
|---|---|
| Ranking among US fossil fuel financers | Top 3 worst offender |
| Global ranking of fossil fuel financing | 7th largest bank |
| Market cap (as of September 28, 2020) | $44.53 billion |
| Investment in fossil fuels (2014-2017) | $496 million |
| Bond issuances underwritten | $198 million |
| Loan provided to AES Corporation | $298 million |
| Refinancing for Innovex Downhole Solutions, Inc. | $84 million |
| Refinancing for FHE USA | $25 million |
| Shares in BlackRock | 22.4% |
| Commitment to sustainable financing | Claims made but no opt-out of new coal projects |
| Coal-fired power plants funding | PNC declared in 2015 that it would no longer fund new plants |
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What You'll Learn
PNC's $496 million investment in fossil fuels from 2014 to 2017
PNC Financial Services, ranked 7th in the list of the largest banks in the US by assets, has been ranked among the top 3 worst offenders in the US for financing fossil fuel companies. From 2014 to 2017, PNC invested a total of $496 million in fossil fuels. The bank underwrote bond issuances worth $198 million and provided a $298 million loan to AES Corporation, one of the largest independent producers of electrical power with operations in several US states.
In 2015, PNC declared that it would no longer fund new coal-fired power plants and would stop financing mountaintop coal removal. Despite this, in 2018, the bank refinanced two oilfield services providers, Innovex Downhole Solutions, Inc. (Innovex) and FHE USA (FHE), with $84 million and $25 million, respectively. PNC also holds 22.4% of the shares in BlackRock, the biggest financier of fossil fuel companies globally.
PNC claims to take action in sustainable financing, but critics argue that the bank has failed to honour its commitments. PNC's investments in fossil fuels have contributed to the bank's violation of the Paris Agreement on climate change. From 2016 to 2019, the top 35 private banks globally invested $2.66 trillion in fossil fuel projects, with funding increasing by 40% between 2018 and 2019 for companies planning new coal, oil, and gas extraction projects.
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PNC's $298 million loan to AES Corporation
PNC Financial Services, ranked 7th in the list of the largest banks in the US by assets, has been ranked among the top 3 worst culprits for financing fossil fuel companies. From 2014 to 2017, PNC invested a total of $496 million in fossil fuels. The bank underwrote bond issuances worth $198 million and provided a $298 million loan to AES Corporation, one of the largest independent producers of electrical power globally, with an ownership stake in 14 power-generating facilities in six US states.
In 2015, PNC declared that it would no longer fund new coal-fired power plants and would move out of coal. Despite this, in 2018, the bank refinanced two oilfield services providers, Innovex Downhole Solutions, Inc. (Innovex) and FHE USA (FHE) with $84 million and $25 million, respectively. PNC also holds 22.4% of shares in BlackRock, the biggest financier of fossil fuel companies globally.
PNC claims to take action in sustainable financing, but it has not opted out of new coal projects. The bank has violated the terms of the Paris Agreement on climate change. Environmental advocates have struggled to persuade large investors to divest themselves of stakes in fossil fuel companies. PNC's decision to no longer finance coal-mining companies that pursue mountaintop removal of coal in Appalachia came after intense pressure from environmental advocacy groups.
The AES Corporation is a Fortune 500 global energy company that has increased its green financing to $2.7 billion to support the construction and operation of clean energy projects in the US. The company is committed to delivering greener and smarter energy solutions to the world and has raised over $2 billion from September to November 2022 for US renewable projects.
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PNC's refinancing of oilfield services providers in 2018
In 2015, PNC Financial Services, ranked 7th in the list of the largest banks in the US by assets, declared that it would no longer finance new coal-fired power plants and coal mining companies that pursue mountaintop removal of coal. However, despite this declaration, between 2014 and 2017, PNC invested a total of $496 million in fossil fuels. This included underwriting bond issuances worth $198 million and providing a $298 million loan to AES Corporation, a major global producer of electrical power.
In 2018, PNC refinanced two oilfield services providers, Innovex Downhole Solutions, Inc. (Innovex) and FHE USA (FHE), with $84 million and $25 million, respectively. Additionally, PNC provided $33 million to another oilfield services provider, Motley, headquartered in Odessa, Texas. Motley, founded in 2010, provides well completion and intervention services in the Permian Basin region of Texas and New Mexico.
While PNC has taken some steps to distance itself from coal financing, its actions contradict its claims of taking action in sustainable financing. The bank's investments in fossil fuel projects contribute to the significant environmental impact of the energy production industry, which emitted 5,131 million metric tonnes (MMmt) of CO2e in the US in 2019, with 32% coming from electricity production.
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PNC's 22.4% shares in BlackRock
PNC Financial Services Group, Inc. (PNC) announced on May 11, 2020, that it would sell its 22.4% stake in BlackRock, amounting to 34.8 million common and Series B preferred shares. The sale was expected to result in $14.4 billion in proceeds for PNC, with BlackRock committing to repurchase $1.1 billion of its stock from PNC.
The decision to sell its stake in BlackRock was motivated by PNC's desire to unlock the value of its investment and bolster its capital position. William S. Demchak, PNC's chairman, president, and CEO, acknowledged BlackRock's strong performance and growth, which had created significant value for PNC since its initial acquisition. By divesting from BlackRock, PNC would also eliminate regulatory obligations associated with owning a large position in another diversified financial services company.
BlackRock, as the world's largest money manager, has a reputation for being the biggest financier of fossil fuel companies globally. PNC's ownership stake in BlackRock indirectly linked the bank to the financing of fossil fuel projects. In recent years, PNC has faced criticism and been ranked among the top offenders for fossil fuel financing. Despite declaring in 2015 that it would no longer fund new coal-fired power plants and distance itself from mountaintop coal removal, PNC has continued to invest in fossil fuel ventures. Between 2014 and 2017, the bank invested a total of $496 million in fossil fuel projects, including underwriting bond issuances and providing loans to major players in the industry.
PNC's decision to sell its 22.4% stake in BlackRock can be viewed as a response to growing pressure from environmental advocacy groups and a recognition of the need to transition away from fossil fuel financing. By divesting from BlackRock, PNC takes a step towards aligning its commitments to sustainable financing and the regulations outlined in the Paris Agreement on climate change.
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PNC's violation of the Paris Agreement on climate
The Paris Agreement is a legally binding international treaty on climate change, with the overarching goal of reducing global warming and preventing the global temperature from rising above 2°C above pre-industrial levels, with an ideal target of 1.5°C. The Agreement was signed by 195 countries, including the United States, in 2015 and entered into force in November 2016.
PNC Financial Services, ranked 7th in the list of the largest banks in the US by assets, has been identified as a top offender for fossil fuel financing. Despite declaring in 2015 that it would move away from coal and no longer fund new coal-fired power plants, PNC invested $496 million in fossil fuels between 2014 and 2017. Additionally, PNC holds 22.4% of shares in BlackRock, the biggest financier of fossil fuel companies globally. These actions contradict PNC's claims of committing to sustainable financing and violate the terms of the Paris Agreement, which calls for a reduction in greenhouse gas emissions and a transition to renewable energy sources.
PNC's financing of fossil fuel projects contributes to global warming and climate change, which are the very issues the Paris Agreement aims to address. By investing in companies that engage in environmentally devastating practices, such as mountaintop coal removal, PNC is failing to align its actions with the commitments made by the United States and nearly 200 other countries under the Agreement.
To meet the goals of the Paris Agreement, it is crucial for financial institutions like PNC to divest from fossil fuels and redirect their investments towards renewable energy sources. PNC must review its funding portfolio and take meaningful action to address its impact on the planet, rather than engaging in greenwashing. The Agreement works on a five-year cycle of increasingly ambitious climate action, and countries are expected to submit updated national climate action plans to reduce their greenhouse gas emissions and build resilience to adapt to rising temperatures.
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Frequently asked questions
Yes, PNC has been ranked among the top 3 worst offenders in the US for financing fossil fuel companies.
In 2015, PNC declared that it is moving out of coal and would no longer fund new coal-fired power plants or finance coal-mining companies that pursue mountaintop removal. However, PNC has been criticized for continuing to invest in fossil fuel projects and for holding shares in BlackRock, the biggest financier of fossil fuel companies globally.
Between 2014 and 2017, PNC invested a total of $496 million in fossil fuels. This included underwriting bond issuances worth $198 million and providing a $298 million loan to AES Corporation, a major producer of electrical power.
PNC is ranked 7th in the list of largest banks in the US by assets, with a market cap of $44.53 billion as of September 28, 2020. From 2016 to 2019, the top 35 private banks globally invested about $2.66 trillion in fossil fuel projects.
PNC's financing of fossil fuel companies contributes to climate change and environmental devastation. The bank has been accused of violating the terms of the Paris Agreement on climate change and failing to take meaningful action on sustainable financing.
