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September 04, 2013

Bank of America Bankrolls Coal India Despite Poor ESG Performance
    by Robert Kropp

Bank of America and Goldman Sachs are among the foreign banks selected by the government of India to sell a stake in the world’s largest coal company, despite Bank of America's statements of commitment to sustainability.

SocialFunds.com -- Even by the often questionable standards of the global coal industry, the performance of Coal India—the world's largest coal mining company whose majority shareowner is the Government of India—is strikingly insufficient on almost every level, according to a report prepared by Greenpeace.

The investor guide documents the company's long history of corruption by senior management figures and workplace accidents that led to 95 deaths in 2010. A human rights group documented the exploitation of child labor at one of the company's subsidiaries. And Coal India relies on the environmentally destructive open-pit extraction method for 90% of its production, threatening the habitats of tigers and elephants and leading to fierce opposition from local communities.

Despite Coal India’s poor performance across the spectrum of environmental, social, and corporate governance (ESG) issues—and despite coal’s dominant contribution to climate change—the Indian government has decided to sell a stake in the company worth about $1 billion. The government has selected several foreign banks—including Bank of America and Goldman Sachs—to sell the shares. Greenpeace has written to the banks, warning them of the financial and reputational risks of being involved in the sale of Coal India shares.

“The financial problems faced by coal are not particular to India, but are part of a larger global shift,” Ashish Fernandes of Greenpeace wrote. “Goldman Sachs itself has predicted that coal is going to be eroded by environmental regulations, renewable energies and energy efficiency, warning that the window for profitable investments in coal is rapidly closing.”

Specifically addressing Bank of America’s involvement in the deal, Greenpeace and the Rainforest Action Network (RAN) questioned the bank’s oft-stated commitment to sustainability.

“Coal India has a record of forcibly displacing tribal and farming communities, ravaging tiger and elephant forests and turning a blind eye to instances of child labor and corruption,” said Ashish Fern-dandes, US-India Advisor with Greenpeace. “We have pointed out these issues to Bank of America on several occasions over the past year and been assured that the bank is looking into them. To have the Bank persist with its partnership with Coal India leaves one with the impression that ‘sustainability’ is just a fancy word to CEO Brian Moynihan and his team.”

"We are deeply disappointed with Bank of America's decision to do business with Coal India," said Ben Collins, Research and Policy Campaigner with RAN. "If Bank of America can't say 'no' to this deal in light of Coal India's involvement in human rights abuses, corruption and forest destruction, the bank's promises to respect communities and the environment mean nothing."

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