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April 19, 2014
ICCR Writes to Bank of America on Financing Fossil Fuels
    by Robert Kropp

A letter signed by 50 institutional investors accompanies a shareowner resolution filed by an ICCR member, requesting that Bank of America report on its financing of greenhouse gas emissions.


As well-intended as their support undoubtedly is, several of the major investment banks that announced their support in January for the Green Bond Principles (GBP) are also among the world's worst offenders when it comes to financing environmentally destructive projects such as mountaintop removal.

Moreover, while some banks have recently signaled their intention to improve their lending practices—Goldman Sachs pulled out of a proposed coal export terminal in Bellingham, WA, and JPMorgan Chase announced that it will phase out financing mountaintop removal projects—others, including Bank of America, have failed to do so thus far, according to the recently published 2014 Coal Finance Report Card.

Overall, the Report Card states, “investment banks poured $31.7 billion in financing into the worst-of-the-worst US coal mining and coal-fired power companies” in 2013. Bank of American received a grade of D- for providing $392 million in financing for mountaintop removal projects last year.

Members of the Interfaith Center on Corporate Responsibility (ICCR) have taken action to address the discrepancies between Bank of America's climate-friendly pronouncements and its financing practices. The Sisters of the Holy Names of Jesus and Mary, an ICCR member, has filed a shareowner resolution with the bank, requesting that it assess and report on its financing of greenhouse gas (GHG) emissions.

“We are concerned about the environmental and social impacts of climate change and what it means for the planet and its people, particularly those most vulnerable–the poor and marginalized, who often feel these impacts most keenly,” Sister Judy Byron said. “In addition, as long-term shareholders, we are also acutely aware of the material risks it poses to shareholder value for the companies in our portfolios.”

Shareowners will vote on the resolution at Bank of America's annual general meeting, scheduled for May 7th.

In addition to the shareowner resolution, 50 institutional investors representing $35 billion in assets under management have written to CEO Brian Moynihan, requesting that management reconsider its opposition to the resolution.

“Banks increasingly recognize that their 'financed emissions' may represent liabilities, particularly those that may manifest in the form of 'stranded carbon assets,' the letter states. “As a result, many financial institutions and their investors now equate climate risk with clear and material financial risk.”

Furthermore, “The Carbon Tracker Initiative has found that the mispricing of climate risk from the fossil fuel reserves of oil, gas, and coal producers may represent significant exposure for financial institutions that invest in and lend to these companies,” the letter continues. “Additionally, banks that finance carbon-intensive energy industries that contribute to global warming must also forecast the financial, legal and reputational implications of near-certain forthcoming GHG regulation.”

“Bank of America has already taken the initial step of scrutinizing its potential exposure to climate risk from its financing of electric power producers,” the letter concludes. “We strongly urge our company to take the next step by measuring and reporting on the climate risks of its financed emissions via lending and underwriting in other emissions-intensive industries and further, to report to shareholders its plans to mitigate these risks.”

 

 
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