Social Licence to Finance and Its Impact on the Coal Mining Industry

22 Pages Posted: 1 Aug 2017

See all articles by Margaret Armstrong

Margaret Armstrong

FGV EMAp; Cerna Mines-Paristech

Alain G. Galli

Cerna Mines-Paristech

Carlos Petter

Federal University of Rio Grande do Sul (UFRGS/PPGA)

Renato Petter

Federal University of Rio Grande do Sul (UFRGS/PPGA)

Anna da Silva

Federal University of Rio Grande do Sul (UFRGS/PPGA)

Lavinia Hollanda

Getulio Vargas Foundation (FGV) - FGV/EPGE Escola Brasileira de Economia e Finanças

Date Written: January 25, 2017

Abstract

By analogy with Social Licence to Operate, Social Licence to Finance refers to the pressure put by society as a whole on the finance industry not to fund projects that are considered as socially undesirable/irresponsible. Because of coal’s contribution to greenhouse gas emissions and hence to global warming, many environmentally active NGOs want to put an end to coal-fired power plants and are putting pressure on the finance industry to stop funding coal-mining. There have been three main impacts: firstly some banks involved in project finance (non-recourse funding of large projects) now refuse coal projects and other restrict funding to them; secondly, socially responsible pension funds no longer invest in coal companies (e.g. the Norwegian Sovereign Fund recently divested investments in thermal coal companies worth $8 billion), and finally the Financial Stability Board now requires international banks and insurance companies to evaluate the potential impact of climate change measures on their business. Going further, the Securities and Exchange Commission (SEC) and the New York Attorney General are putting pressure on mining and oil companies listed on the NYSE to provide much more explicit warnings to investors.

Keywords: Climate Change, Greenhouse Gas Emissions, pension funds, project finance

Suggested Citation

Armstrong, Margaret and Armstrong, Margaret and Galli, Alain G. and Petter, Carlos and Petter, Renato and da Silva, Anna and Hollanda, Lavinia, Social Licence to Finance and Its Impact on the Coal Mining Industry (January 25, 2017). Available at SSRN: https://ssrn.com/abstract=3011039 or http://dx.doi.org/10.2139/ssrn.3011039

Margaret Armstrong (Contact Author)

Cerna Mines-Paristech ( email )

60 bd St Michel
Paris, 75006
France
33140519313 (Phone)
33140519145 (Fax)

FGV EMAp ( email )

190 Praia de Botafogo
Rio de Janeiro, 22250-900
Brazil

Alain G. Galli

Cerna Mines-Paristech ( email )

60 bd St Michel
Paris, 75006
France

Carlos Petter

Federal University of Rio Grande do Sul (UFRGS/PPGA) ( email )

Rua Washington Luiz, 855. Centro
Porto Alegre - RS, 90010-460
Brazil

Renato Petter

Federal University of Rio Grande do Sul (UFRGS/PPGA) ( email )

Rua Washington Luiz, 855. Centro
Porto Alegre - RS, 90010-460
Brazil

Anna Da Silva

Federal University of Rio Grande do Sul (UFRGS/PPGA)

Rua Washington Luiz, 855. Centro
Porto Alegre - RS, 90010-460
Brazil

Lavinia Hollanda

Getulio Vargas Foundation (FGV) - FGV/EPGE Escola Brasileira de Economia e Finanças ( email )

Praia de Botafogo 190/1125, CEP
Rio de Janeiro RJ 22253-900
Brazil

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