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Our commitment to responsible energy lending

Wells Fargo is committed to supporting the transition to a lower-carbon economy, which includes responsibly financing all forms of energy, clean technologies, and energy and resource efficiency.

February 15, 2018
Perry Pelos

Perry Pelos is head of Wells Fargo Wholesale Banking.

Projects that generate significant attention, such as the Dakota Access pipeline, the Keystone XL pipeline, and Enbridge’s Line 3 pipeline continue to spark debate about energy development, the safety and environmental impact of pipelines, and bank financing of the energy industry. As a participant in this industry, we take those concerns seriously and pride ourselves on the diligence we employ and our broad and evolving view of the energy landscape.

One of Wells Fargo’s 2020 Corporate Social Responsibility commitments is to accelerate the transition to a lower-carbon economy. We are focused on this commitment in our products and services, operations, and philanthropic commitments. However, while we are focused on supporting the energy industry’s transition to cleaner sources of energy, this does not mean we are moving away from supporting our existing customers as they pursue responsible energy development, production, and transportation to help meet the current energy needs of the U.S.

According to the U.S. Energy Information Administration, power generation accounts for about 40 percent of fossil fuel usage, whereas approximately 50 percent is split between industrial production and commercial transportation, and the other 10 percent comes from residential and commercial usage.

A National Renewable Energy Laboratory study from the U.S. Department of Energy showed that the U.S. could generate 80 percent of its electricity from renewable energy by 2050 with currently available technologies, including wind turbines, solar power, biopower, geothermal energy, and hydropower. In 2016, according to the EIA, hydropower and other renewables contributed only about 15 percent of the energy generation mix, with fossil fuels contributing more than 60 percent of the energy generation in the U.S.

We have seen tremendous growth in renewable and cleaner energy generation, with biomass, geothermal, hydropower, solar, and wind representing nearly two-thirds of all new power generation around the world. Wells Fargo has played an important role in the development of this trajectory.

By investing in the development of new renewable energy projects, supporting our utility and power customers as they develop and invest in renewable energy resources and other clean technologies, and supporting our customers in the responsible development of traditional forms of energy — including fossil fuels — we are supporting the transition to cleaner forms of energy and a lower-carbon future, while honoring our broader commitment to responsibly finance the development of all forms of energy to meet U.S. demands.

We respect the various viewpoints concerning fossil fuel exploration, development, and transportation, and we understand that many of our stakeholders oppose further fossil fuel production and infrastructure development because of concerns about climate change and other potential environmental impacts, or because of opposition to these projects by particular communities. We also recognize the contributions to economic development and job creation by all of our energy customers.

Energy financing, present and future

At Wells Fargo, we provide banking services to a number of energy companies — from oil and gas to solar and wind, and other environmentally sustainable businesses. We believe our specialized expertise and support of our customers across the energy spectrum is industry-leading.

Wells Fargo is a leader in the field of renewable energy tax-equity financing, having started investing in wind and solar projects in 2006. In 2016, projects owned in whole or in part by Wells Fargo produced more than 8 percent of all solar photovoltaic and wind energy generated in the U.S. Additionally, Wells Fargo has invested more than $70 billion in environmentally sustainable businesses since 2012 — more than $17.5 billion in 2016. For instance, through one of its renewable energy investments, Wells Fargo was instrumental in the installation of 25 SunPower® carport solar panels at Kern High School District in California. On the East Coast, Wells Fargo supports Strata Solar with advice, expertise, and financing. The company, based in Chapel Hill, North Carolina, builds and maintains utility-scale solar farms, selling the clean power it produces to utility companies. In the past five years, Strata Solar has trained and employed more than 2,000 local workers and helped make North Carolina the third-largest state in the U.S. for solar installations.

Through our philanthropy programs, in 2016, we donated $15.6 million to support nonprofits, universities, and community organizations focused on environmental sustainability and education, as well as the development and commercialization of clean technologies. Our goal is to provide $65 million in support to such organizations by 2020. The Wells Fargo Innovation Incubator, a $30 million partnership with the National Renewable Energy Laboratory, is an example of the type of public-private partnerships and engagement that we believe will accelerate clean-energy development and investment. In addition, Wells Fargo awarded We Care Solar with a four-year, $2 million grant to help supply solar energy “suitcases” to communities in the U.S. and overseas that don’t have access to electricity.

And, we are walking the talk in our own operations. We’ve reduced greenhouse gas emissions by 36 percent since 2008, and we are now meeting 100 percent of our global electricity needs with renewable energy. We’re also expanding our network of electric car charging stations at our offices, so more of our team members can power up at work.

Managing environmental and social risk

In addition to increasing our focus and support for clean technologies and renewable energy, we also believe it is important that we continue to lend responsibly — managing risks, listening and learning, and lending and investing to help our communities, customers, and countries meet our energy and economic needs.

Recognizing the environmental, social, and human rights issues associated with energy exploration, production, and transportation starts with understanding and managing risk. Our Environmental and Social Risk Management policies (PDF), which supplement our traditional due diligence practices, detail our approach to managing risk in sectors such as the oil and gas industry, and allow us to evaluate our customers’ commitment, capacity, and track record to operate in an environmentally and socially responsible manner.

Our ESRM policy applies to all subsectors within the oil and gas industry, including oil sands, offshore and hydraulic fracking. We continually review and update our ESRM due-diligence requirements as our understanding of complex environmental and social issues evolves and as business practices change. We also adhere to the Equator Principles — an international framework for independently evaluating the environmental and social risk management practices for project finance-related activities.

Respect for Indigenous Peoples

Recognizing the potential social and environmental risks that pipeline and other infrastructure projects can pose to American Indian/Alaska Native communities, we developed an Indigenous Peoples Statement in consultation with tribal leaders, stakeholders, and their representatives. The statement guides our decision-making for future projects in which proceeds from Wells Fargo financing could impact indigenous communities.

Our Indigenous Peoples Statement requires that for any project financing transaction, our customer must demonstrate alignment with International Finance Corporation Performance Standard 7 on Indigenous Peoples — a framework of business principles that calls for free, prior, and informed consent. Our policy also requires additional due diligence in transactions in which our customer’s operations and activities may impact indigenous communities.

This is very important to us because we’ve been serving American Indian/Alaska Native governments and communities for more than 50 years. Today, we provide capital and financial services to more than 200 tribal entities in 27 states, including tribal community development projects. We have dedicated team members focused on serving these customers and communities with products, services, philanthropic support, and financial literacy programs designed to help individuals and tribal communities succeed financially. And we recently announced a $50 million commitment to American Indian/Alaska Native communities to address their unique economic, social, and environmental needs.

Companies like ours have a responsibility to respect human rights, and we will continue to do so as part of our due diligence processes.

Moving forward

In our view, the best way to continue to be a responsible lender is to provide financing that supports the current and future energy needs of all of our customers and communities. This responsibility includes a focused effort to ensure that Wells Fargo continues to be one of the largest lenders and investors in renewable and cleaner energy as we move together toward a lower-carbon future.

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