Bank of America’s New Corporate Social Responsibility Report Defends Business-as-Usual on Coal

Written by Ben Collins

Topics: Clean Energy, Climate, Coal, Finance

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This morning, Bank of America released its 2012 Corporate Social Responsibility (CSR) report, which falls well short of committing to the serious action we need from banks on climate change. Just ahead of the president’s climate speech tomorrow, which is anticipated to set reductions for emissions from existing power plants, it is disappointing to find that the bank is unwilling to take a leadership position on coal.

At its shareholder meeting last month, BofA faced a chorus of criticism from members of communities impacted by mountaintop removal coal mining in Appalachia, proposed coal export terminals in the Pacific Northwest, and air pollution from coal-fired power plants in Charlotte. So what did the bank say today in response to concerns about the devastating impacts of coal? Very, very, little. Unfortunately, Bank of America’s statements on coal in its CSR do not add up to a coherent strategy for addressing the environmental and health impacts of its coal financing.

Bank of America did, however, devote a full page in its CSR report to answering questions about its coal financing. For those who want to dig deep into BofA’s CSR report, our responses to their answers are below:

I. Why is Bank of America continuing to finance coal?

Bank of America’s Answer:

“If large financial institutions were to unilaterally discontinue financing the coal industry, it would have negative consequences for the U.S. and global economies. We have strongly supported policies to help transition to renewable, alternative and other low carbon solutions. We also are committing more money than any other financial institution to reduce energy consumption and support renewable and alternative energies — $70 billion. And, we’re working with our clients in the fossil fuel value chain to help them transition to a lower-carbon economy.”

RAN’s response:

There are several cost-effective pathways to transition the U.S. away from fossil fuel-fired electric power, but Bank of America’s ongoing financing relationships with the coal industry perpetuates a dangerous and unsustainable status quo. Furthermore, Bank of America’s engagement with coal sector clients has not been effective, as several of its clients have moved in the wrong direction on coal last year. For example, Arch Coal continues to apply for new permits to blow up mountains, and the Tennessee Valley Authority is seeking to extend the life of its aging coal fleet.

The future of the US energy mix is up for grabs, and without transparent targets and deadlines for phasing out its coal financing, Bank of America will continue to put U.S. communities and the climate at risk. Bank of America’s renewable energy lending commitment, though a step in the right direction, falls well short of a comprehensive strategy for addressing the carbon impacts of its lending and financing.

II. Does Bank of America bank with companies who engage in mountaintop removal?

Bank of America’s Answer:

“In 2008, we assessed the regulatory and legal framework related to MTR and determined it presented risk to clients who were significantly engaged in the practice. We implemented a policy to phase out relationships with clients whose business was predominantly focused on MTR mining. Since then, regulators have put better permitting and monitoring practices in place, and industry consolidation has lowered client exposure to MTR. We continue to work with all stakeholders on this issue.”

RAN’s response:

The short and clear answer is, YES. Even with its MTR commitment (which sets a limit on a client company’s MTR involvement at 50% of total coal production—a threshold high enough to be effectively meaningless), Bank of America provided more than $1.3 billion to companies that engage in the practice in 2012.

RAN has provided Bank of America’s environmental team with compilations of peer-reviewed studies that demonstrate that the idea of “better” MTR mining is a myth. Members of several communities in Appalachia have also spoken directly to the bank’s CEO at several shareholder meetings about the health and environmental impacts of Bank of America’s MTR clients on their communities. Yet Bank of America’s coal policy claims—without any supporting evidence—that MTR “can be conducted in a way that minimizes environmental impacts in certain geographies.” Nor is there evidence that what the bank characterizes as “better permitting and monitoring practices” are reducing the documented environmental and health impacts associated with the practice.

In reality, mounting evidence has linked MTR to health impacts ranging from cancer to birth defects; state regulators have systematically failed to enforce environmental regulations at MTR sites; and a United Nations delegation has called for investigations into potential human rights violations by MTR companies related to the right to health and the right to water.

 III. What is Bank of America doing to influence public policy in this area?

Bank of America’s Answer:

“We are engaged with policy makers, clients and environmental advocates on these issues. We supported federal cap and trade legislation when it was under consideration a few years ago. When the prospects of federal legislation dimmed, we turned efforts to the states and regions. We still fundamentally believe that to effectively address climate change, there needs to be a cost to emitting carbon pollution.”

RAN’s response:

Political gridlock does not excuse Bank of America’s irresponsible lending choices, which provide a financial lifeline to the struggling coal industry. Climate science demands that Bank of America rapidly phase out financing of coal-fired energy. According to the International Energy Agency, if investment in fossil fuel-powered energy infrastructure continues on its current course through 2017, the world will be locked into a path towards catastrophic and irreversible climate change.

15 Comments For This Post I'd Love to Hear Yours!

  1. Thanks for this thorough “smack down” of BOA’s lame defense of its business-as-usual policies. As Earth Quaker Action Team continues to fight a similar battle with PNC Bank, your well thought out and well stated arguments are super helpful to us. And you show clearly that the kind of thinking we face at these profit-mongering institutions is entrenched and that they lack integrity and will go to any lengths to lie to the public about both their motivations and their actions. Keep up the good work — you lift us all!

  2. Ashish Fernandes says:

    How can BoA invest in NEW coal – particularly in the developing world, like India – and simultaneously claim that it is helping the transition to a low carbon economy?? Think they’re in need of a dictionary and some basic physics lessons….

  3. Johan Frijns says:

    How sad to read yet another banks’ lame excuses not to make the only sensible choice in their energy lending strategy; out of coal, towards renewables.

    I am convinced that the first major bank making a clear, solid choice for renewables and against coal will reap huge business and reputational benefits from that decision; millions of customers will appreciate that choice and chose to bank with the only major bank that fully understands what our time demands.

    BoA, why wait for another bank to be that first?

    Johan Frijns, Director BankTrack

  4. Peter Vogelsanger says:

    Cool activists you’ve got there, sitting by the barrel.
    Maybe in Europe we should also mobilize, including some awsome silverbacks and expose our worst banks specifically.
    Start with UBS, my favorite, perhaps.
    Keep up with your good work and sharing!

  5. Chris Baker Evens says:

    Once again frontline communities are completely left out of BoA’s equations. No matter how much money is invested in renewable energy solutions it cannot cancel out the devastating impacts of cancer, respiratory illness, kidney disease, birth defects and living exposed to the heavy metals dumped in local streams and headwaters.

    While Appalachia is rising, Bank of America is sinking to new lows.

    Chris Baker Evens, Campaign Organizer, Earth Quaker Action Team

  6. Yann Louvel says:

    Thank you for this great analysis!

    To add to it Bank of America’s first answer avoids the most important point: is BofA funding more or less coal every year? The answer from the Bankrolling Climate Change report data shows that coal funding from BofA went up 30% between 2005 and 2010! This is a strange way to support the transition to a low carbon economy, and it actually contradicts and makes totally useless BofA commitments to funding alternatives. The energy transition is not only MORE energy efficiency and renewables, but also most importantly LESS fossil fuels!

    As long as banks won’t publish their contribution to the energy transition with concrete figures not only on their “green” funding but also on their “black” funding, and as long as these figures won’t go in the right direction, we’ll be there to denounce the greenwash!

    Yann Louvel, Climate and Energy Campaign Coordinator for the BankTrack network

  7. Appalling! Bank of America needs to pick up their game and get out of financing the dirty and dangerous coal business.

  8. This is really disappointing. I know that there are people at Bank of America who want to create real change, and I pray that their consciences and their courage win out.

    Bank of America, you have a moral responsibility to help protect our precious planet and the people who live on it. Talking about why you care about the environment and touting the first steps you have taken is not the same as TAKING ACTION to stop bankrolling coal and mountain top removal.

  9. Beth Henry says:

    I also appreciate RAN’s smack-down of Bank of America’s so-called Corporate Social Responsibility report. What could be LESS socially responsible than continuing to fund coal,the biggest single cause of the climate chaos that threatens the very existence of life on earth. BofA claims quitting coal would hurt the economy, but it’s hard to imagine how the economy could thrive as the costs of climate impacts — extreme weather, sea-level rise, food shortages — keep rising. The state motto of North Carolina, where BofA is headquartered, is “To Be, Rather Than to Seem.” BofA should stop trying so hard to seem socially responsible and instead BE responsible — protect our climate and a livable future. Stop funding coal. Fund only the solutions!

  10. Camila Bustos says:

    Bank of America’s lack of leadership is absurd. They continue to ignore the need to transition out of a coal economy. They continue to engage in destructive practices without any real consideration of the consequences. It’s almost unbelievable to think that after hearing the stories of those most affected by the coal industry in May, the Bank’s directives refuse to take meaningful action.

  11. Pat Moore says:

    I am the old lady in the right in the picture. Although we have owned BOA stock through the years, have sold most because of BOA’s decisions to put profit before people. No amount of PR and catchy slogans will make up for policies which not only
    will make our people proud to be stockholders again, but will be a better business plan for the bank.

    Aren’t you tired of legislation and fines?

  12. Bonnie McKinlay says:

    Here in the Pacific Northwest, we fight coal export terminals that are being proposed by Arch and Peabody Coal. These companies’ operations are financed by Bank of America. Bank of America’s efforts to build a greener future are inconsistent with these financial arrangements with Big Coal. B of A’s fuel reduction policies are commendable, but do not mesh the the tons of carbon that will spew forth if the coal exports reach the proposed destinations in Asian coal-fired plants and the devastation of MTR continues.

  13. Alli Welton says:

    By continuing their backwards policies on coal and MTR mining, Bank of America is sanctioning the coal industry’s violation of human rights and the destruction of climate change that threatens millions of lives, including every member of my generation. This is infuriating and heartless. They should expect me, and many other students, to be making a lot of noise at their campus recruitment sessions next fall and warding off students who want to work for a company that values human lives.

  14. Jim Plunkett says:

    Thank you Ben, for your persistent coverage of this stubborn bank.
    The bank says,
    “If large financial institutions were to unilaterally
    discontinue financing the coal industry, it would have
    negative consequences for the U.S. and global
    economies.”
    We already have the negative consequences to the economy! They are asthma, mercury, tons and tons of CO2, mountain top removal, arsenic, … Do they think a higher energy cost would be worse than having asthma?

  15. Vanessa Green says:

    Thanks for this Ben, and RAN team folks.

    Similar to Johan (comment above), I am convinced BofA is overlooking a huge business and reputational opportunity by not making investment in renewables their bread and butter. Perhaps none of their executive leadership are talking with financial analysts and asset management professionals external to their own team?? Those folks say the transition off coal is inevitable, which is why other banks see the writing on the wall and are getting ahead of Bank of America. I can’t believe this bank’s executive leadership is going to allow more poor public image choices while still holding such a precarious status amidst its competitors.

    Maybe if BofA wasn’t perpetually caught up in foreclosure lawsuits it would have more time and resources to dedicate to authentic research and responses to our energy emergency. Hey Brian, why don’t you give your staff cash bonuses and gift cards for that?

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