Climate-Conscious Banks Stick With Distressed Polluters

Goldman Sachs Group Inc. and JPMorgan Chase & Co. have lofty environmental goals but find themselves stuck in bets on two less-than-green energy companies.

The banks are confronting the need to protect investments in troubled energy companies while also living up to commitments to sustainability in their environmental, social and governance policies.

Goldman Sachs is poised along with other investors to take control of bankrupt driller Nine Point Energy Holdings Inc., which has been flaring natural gas in North Dakota at rates that exceed state guidelines.

JPMorgan Chase is financing the nation’s largest coal producer, Peabody Energy Corp., and extended it a lifeline that lasts through the end of 2024, a year after its self-imposed deadline for phasing out its credit exposure to the coal industry.

ESG can be difficult to clearly define and “we need to be realistic about fossil fuel and even coal usage for applications where there is no substitute,” said Barry Kupferberg, managing partner of Barkers Point Capital Advisors, an investment banking and advisory firm focused on energy transition companies. “This inevitably leads to decisions and positions that can appear inconsistent with stated goals,” he said.