Can Banks Save Mountains?

This article examines the impact of bank policies aimed at limiting lending to companies engaged in mountaintop removal (MTR) coal mining, a practice associated with significant environmental concerns. Analyzing data from 2000 to 2020 on loans from the 80 largest coal industry lenders, the study finds that these policies did not lead to significant reductions in the frequency, amount, or terms of loans to MTR producers, nor did they result in decreased MTR coal production. However, banks facing greater public scrutiny—such as large banks, those under media attention, or with deposit bases in affected states—were somewhat more likely to reduce MTR lending. The findings suggest that many banks introduced these policies primarily to enhance their environmental, social, and governance (ESG) ratings without substantially changing lending behavior, consistent with a "greenwashing" explanation. The study highlights the limited effectiveness of self-imposed, targeted bank policies in curbing environmentally harmful corporate practices.