May 26, 2004
New Bank of America Policy Sets Best Practice on Climate Change in US Bank Sector
by William Baue
Environmentalist organization Rainforest Action Network helps usher Bank of America into the
vanguard of US banks improving their environmental responsibility.
Bank of America (ticker: BAC) has surpassed Citigroup (C) as the
frontrunner on environmental responsibility and climate change risk mitigation in the US banking
sector. Citigroup was the only US-based bank to sign onto the Equator Principles, a framework promoting
environmental and social responsibility at financial institutions in their project financing, until
Bank of America signed on last month. In January 2004, Citigroup and the Rainforest Action Network
(RAN), a San Francisco-based environmentalist
group, jointly announced Citigroup's new environmental
initiatives that set the bar for US banks on environmental stewardship. Last week, Bank of
America raised that bar by announcing with RAN even more progressive environmental policies and
Bank of America’s commitments exceed those set by Citigroup in
three distinct areas, according to Toben Dilworth, communications coordinator for RAN.
"BofA has agreed to articulate specific targets and timelines in order to reduce greenhouse gas
emissions in both their direct operations and those that stem from their investments," Mr. Dilworth
told SocialFunds.com. "BofA’s policy broadens the definition of 'no-go zones,' specifically
prohibiting extractive operations in intact forests located in tropical, temperate, and boreal
"BofA will not fund any projects where indigenous land claims are not settled," he
Bank of America commits to reduce by 7 percent its own direct emissions of
greenhouse gases (GHG) such as carbon dioxide (CO2) by 2008. It bases this goal on best estimates
of the Intergovernmental Panel of Climate Change (IPCC), which determines global scientific consensus on climate
change. The bank also seeks to reduce by 7 percent its indirect GHG emissions, namely those the
bank is exposed to through investment in its energy and utilities portfolio. Bank of America will
commission a research report evaluating banking sector risk exposure through financing GHG emission
Recognizing that forests play a key role in recycling carbon
globally, essentially breathing in the carbon emitted through human activity, Bank of America
introduced a new forest practices policy. The policy bars the bank from financing resource
extraction from old-growth tropical rainforests or logging of "intact" forests as defined in
mapping by the World Resources Institute (WRI),
an independent environmental think tank. Bank of America will provide financial assistance to WRI
to continue mapping intact forests. The policy also prohibits financing companies that collude
with in illegal logging operations
The forest practices policy covers not only
environmental issues but also social concerns, specifically regarding indigenous populations.
"Bank of America respects the rights of indigenous communities whose livelihoods or
cultural integrity could be adversely impacted," the policy states. "Due diligence procedures for
projects in [sensitive] forests will weigh the impact of credit decisions on the indigenous peoples
that could be affected."
"The bank will not finance the operations unless it is
determined that indigenous peoples impacted by projects in these sensitive areas, whether directly
or by induced impact, have the opportunity and, if needed, culturally appropriate representation,
and have access to the information to engage in informed participation," the policy continues.
Bank of America's policies represent not only a high-water mark for other banks to strive for,
but also a stepping stone floating above the water for the next bank to surpass with even more
responsible environmental and social policies.
"Each policy will present itself as an
opportunity to take another significant step toward beginning to reconcile ecology and economy
within the financial sector," Mr. Dilworth said. "We recognize that currently, as much as the
policies are progress, they are clearly not enough to confront the magnitude of the problems facing
us--there are many areas where we will be continuing to press for significant changes.
"These include an immediate ban on coal projects, and establishing free and prior informed
consent for indigenous communities in order to guarantee say in projects affecting their land and
livelihoods," he continued.
RAN is in active dialogue with other US banks, including Bank
One (ONE), Wells
Goldman Sachs (GS), Wachovia (WB), and US Bancorp (USB).
look forward to seeing some additional major policies as well as continuing to work toward
implementation of existing policies," said Mr. Dilworth.