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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 practices.

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 zones."

"BofA will not fund any projects where indigenous land claims are not settled," he added.

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 intensive industries.

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 Fargo (WFC), Goldman Sachs (GS), Wachovia (WB), and US Bancorp (USB).

"We look forward to seeing some additional major policies as well as continuing to work toward implementation of existing policies," said Mr. Dilworth.

 

 
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