Co-op tightens green lending criteria to hit tar sands' distribution

The Co-operative Bank has stepped up its high-profile attack on oil firms involved in the carbon intensive exploitation of North American tar sands, tightening its ethical lending criteria to exclude not just those companies directly involved in the practice but also those involved in the distribution of resulting "unconventional oil".

The new criteria, which also exclude firms involved in developing and distributing those biofuels believed to result in a net increase in greenhouse gas emissions from receiving funding fgrom the bank, were drawn up after a survey of its 80,000 customers revealed high-level concern over funding firms operating in these controversial areas.

The bank says the new policy will mean an increase in the number of loans it will decline, a figure that passed £1bn after 17 years of operation last year.

The bank's new policy states that it "will extend its exclusion beyond the extraction and production of fossil fuels to those businesses engaged in the distribution of fuels with a particularly high global warming impact, particularly unconventional oil sources (such as tar sands) and certain biofuels ".

It adds that "the development of these fuels has the potential for significant local environmental impacts and will accelerate increases in global greenhouse gas emissions".

Keith Alderson, director of Corporate Banking at The Co-operative Bank, said that there was a strong commercial case for refusing finance to firms operating in carbon intensive sectors.

"The Bank's Ethical Policy has led to more than £1bn in unethical business being declined, but it has also contributed to a massive £3.8bn net growth in our corporate lending," he said.

The bank said that its ethical positioning had not undermined its business performance, which saw a further 15 per cent growth in customer lending in 2008 as well as lower bad debt charges compared with 2007.

It also registered a 40 per cent increase in personal savings, and a 65 per cent increase in current account opening - a performance attributed in part to the bank's ethical policy.

In related news, a recent survey of 1,264 US adults by investment firm Allianz found high levels of support for green investment with 78 per cent of respondents claiming that environmental technology had the potential to be the "next great American industry", and 64 per cent designating clean tech as the sector to be the "most desirable" investment opportunity among 10 categories surveyed.