Bank of America joins the parade to shift away from fossil fuels
Financial services giant Bank of America has confirmed that it will work to reduce its financial exposure to the coal sector, pointing to the future risk posed by greater regulation and competition from natural gas.
At its annual meeting last week, the company announced a new coal policy which sets out plans to cut its lending to coal extraction companies and the coal divisions of broader mining companies.
“Our new policy reflects our decision to continue to reduce our credit exposure over time to the coal mining sector globally,” said Andrew Plepler, the bank’s head of corporate social responsibility.
The move is just the latest in a series of announcements that point to a wider fossil fuel divestment movement, with numerous universities and large asset owners, such as the Rockefeller Foundation, pulling out of traditional, high-carbon energy investment.
Last month, HSBC stated in a client research note that the recent fall in energy prices has “put a spotlight on stranded fossil fuel assets, making them a risk to investors."
The note also elaborated on the financial dynamics in play: “As rigs are dismantled, capex is cut and operating assets quickly become unprofitable, stranding risks have become much more urgent for investors to address, including shorter term investors."
According to Bank of America, the new policy is a result of increased pressure from universities and environmental groups, such as the Rainforest Action Network (RAN).
“From these engagements, we have developed a coal policy that will ensure that Bank of America plays a continued role in promoting the responsible use of coal and other energy sources," according to a statement, "while balancing the risks and opportunities to our shareholders and the communities we serve."
RAN described the move as representative of a "sea change" in the investment world.
“It acknowledges the responsibility that the financial sector bears for supporting and profiting from the fossil fuel industry and the climate chaos it has caused,” said Amanda Starbuck, RAN’s energy program director.
Meanwhile, Bank of America shareholders have rejected a resolution requiring the bank to report on its impact on climate change from financing fossil fuel projects. The company had opposed the measure, saying it already reports on emissions from its U.S. electric utility portfolio.
This story originally appeared at 2degrees.