Does BofA’s New $50 Billion Green Initiative Offset its Coal Projects?

Bank of America (BofA) announced on Monday a new 10-year, $50 billion environmental business goal to “help address climate change, reduce demands on natural resources and advance lower-carbon economic solutions.” BofA’s commitment to supporting green business seems to be a win-win strategy as its CEO Brian Moynihan explains: “Environmental business delivers value to our clients, return for our shareholders, and helps strengthen the economy.” It is also very impressive compared to the commitments made by other financial institutes like Goldman Sachs ($40 billion) and Wells Fargo ($30 billion).

The only problem is that BofA seems also to be committed to making money of all energy projects, not just green ones, including coal projects. According to Rainforest Action Network, BofA provided more than $6.4 billion in underwriting for U.S. coal between 2010 and 2011. This seeming contradiction brings up the question – is BofA truly committed to sustainable business or are they just committed to any business that provides high returns, green or not?

BofA’s new goal, effective Jan. 1, 2013, follows the anticipated completion of the company’s current 10-year, $20 billion environmental business initiative – a program that is more than four years ahead of schedule. The new initiative’s areas of focus include energy efficiency, renewable energy and energy infrastructure, transportation and water and waste. The plan will consist primarily of lending, equipment finance, capital markets and advisory activity, carbon finance, and advice and investment solutions for clients.

In addition, the bank announced new operational goals it plans to achieve by 2015, including 25 percent reduction in energy consumption from 2004, 20 percent reduction in paper consumption (2010 baseline), 20 percent reduction in global water consumption (2010 baseline), 70 percent diversion of global waste from landfill and more than 30 percent aggregate reduction in global GHG emissions (2004 baseline). “Meeting these aggressive, industry-leading goals requires new ways of working across our company. We have a strong culture of environmental sustainability,” Cathy Bessant, Global Technology and Operations executive and chair of Bank of America’s Environmental Council explained.

We don’t have yet specific details on how BofA will be spending the $50 billion, but we probably can get some clues from the bank’s last green initiative. According to the bank, as of March 31, 2012, it has delivered $17.9 billion out of a total commitment of $20 billion including $8.4 billion that has gone for energy efficiency activities ranging from programs to provide low-cost loans and grants to support energy efficiency retrofits in low-income neighborhoods, to financing lighting, heating and cooling equipment upgrades in public housing developments, commercial and government buildings. Another $5 billion was aimed at various renewable energy projects and nearly $1 billion went to financing of hybrid vehicle purchases by the bank’s customers.

The picture BofA presents is very clear – we take the environment seriously. It is also echoed in its CSR report: “Environmental sustainability continues to be an issue of critical importance to Bank of America and those we serve. We recognize our responsibility to take action to reduce our environmental footprint, while having an opportunity to use our business resources to enable our clients, customers and employees to reduce their own environmental impacts.” Last but not least, it is reflected in the dominant role the bank’s chairman, Chad Holliday, is playing in promoting clean energy, from chairing the board of the American Energy Innovation Council to being a co-chairman of a U.N. panel on sustainable energy in the upcoming Rio+20. I myself heard him talking passionately couple of times about the need to significantly increase the use renewable energy.

What BofA doesn’t include in the picture it paints is that at the same time it continues to finance coal. RAN’s report ‘Dirty Money’ ranked BofA as the worst bank on coal financing, based on Bloomberg data of each bank’s number of transactions with mountaintop removal and coal-burning utility companies from 2010 to 2012. According to RAN, BofA is making things worse by ignoring its own commitment on this issue. RAN’s report claims that “Bank of America was the first bank to publicly commit to ‘phase out financing’ of coal companies that predominantly practice Mountaintop Removal coal mining. However, in the three years from that initial announcement, the bank has provided financing for four of the largest MTR producers, underwriting more than 43 percent of the MTR coal mined in Appalachia—more than any other bank except PNC.”

While this is not the only sustainability issue BofA has wrestled with lately, BofA’s coal funding generates serious doubts about the truthfulness of the bank’s commitment to the environment. It’s not that BofA’s initiative is not impressive in its magnitude, but $6.4 billion in underwriting for U.S. coal is not a small number either. Don’t get me wrong – BofA certainly has the right to fund coal projects, especially if they generate high returns – after all, it’s a bank. But at the same time, if BofA really wants to establish a legacy of leadership in the environmental arena as it claims, it can’t have it both ways. It’s time for BofA to take a clear stand and decide exactly where its commitments lie.

Raz Godelnik is the co-founder of Eco-Libris, a green company working to green up the book industry in the digital age. He is an adjunct faculty at the University of Delaware’s Department of Business Administration, CUNY and the New School, teaching courses in green business and new product development.

Raz Godelnik

Raz Godelnik is an Assistant Professor and the Co-Director of the MS in Strategic Design & Management program at Parsons School of Design in New York. Currently, his research projects focus on the impact of the sharing economy on traditional business, the sharing economy and cities’ resilience, the future of design thinking, and the integration of sustainability into Millennials’ lifestyles. Raz is the co-founder of two green startups – Hemper Jeans and Eco-Libris and holds an MBA from Tel Aviv University.

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