How powerful is public relations? It's powerful enough that banks are abandoning legal, profitable business during the downturn to avoid taint, reports Tom Zeller, Jr. of The New York Times.
After years of legal entanglements arising from environmental messes and increased scrutiny of banks that finance the dirtiest industries, several large commercial lenders are taking a stand on industry practices that they regard as risky to their reputations and bottom lines.
In the most recent example, the banking giant Wells Fargo noted last month what it called “considerable attention and controversy” surrounding mountaintop removal mining, and said that its involvement with companies engaged in it was “limited and declining.”
The article is a placement for an environmental advocacy group, the Rainforest Action Network, whose PR team did an admirable job of lining up real-world examples of where there activities made a measurable difference in corporate behavior. The article is overwhelmingly supportive of the group's effectiveness in using the power of PR to change behavior at banks and other lenders.
The one note of skepticism comes from an analyst who wonders how long the list of banned activity can get before it collapses from its own weight.
“It’s one thing if your potential borrower is dumping cyanide in a river,” said Karina Litvack, the head of governance and sustainable investment with F&C Investments, an investment management firm based in London. “But if they’re dumping carbon dioxide into the air, which is not exactly illegal — what do you do? Banks are in kind of a quandary, because they are competing for business, and if they get holier-than-thou and start to play policeman, they risk allowing other banks to take that business.”
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