Bank of America's New Coal Policy Is Groundbreaking - and Imperfect
Last month, Bank of America published its 2014 Corporate Social Responsibility Report, which addressed the bank’s financing policies and practices in detail. This post looks back on the bank’s release of its updated coal policy in May, and looks at the strengths and weaknesses of the policy update and what it means for the banking sector’s financing of coal more broadly.
Bank of America’s new coal policy is both groundbreaking and imperfect. It acknowledges that the bank has a responsibility not only to finance the transition to low-carbon energy but also to cut financing for high-carbon energy sources. The policy goes well beyond comparable policies at the bank’s U.S. peers by committing to a broad cutback to BofA’s lending for coal mining both in the U.S. and internationally. However, this commitment lacks public-facing detail in terms of targets and deadlines, and fails to address the bank’s continued exposure to coal-fired power production. In spite of these flaws, Bank of America’s updated coal policy represents a clear step away from financing coal and a bold challenge to the bank’s peers in the months leading up to the Paris climate conference.
The Bottom Line
With the window for avoiding the worst climate change emissions scenarios rapidly closing, 2015 will be a critical year for the climate. As the Paris climate summit approaches, the banking sector must act decisively to stop financing the production and burning of a fuel that is incompatible with a livable planet. Bank of America’s new coal policy is a major step in this direction. And with CrÃ©dit Agricole, Europe’s third largest bank adopting a similar policy later this spring, pressure is building on the rest of the industry to cut ties to coal. This summer and fall, RAN and over 75 other organizations are calling on global banks to meet and surpass Bank of America’s policy by committing to the Paris Pledge and ending financing for coal mining and coal-fired power production. The challenge to other U.S. banks is clear: It’s past time to stop financing coal.
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