The Bank of America will cut its lending to the coal sector in a bid to scale down its financial involvement in fossil fuels, citing the future risk posed by greater regulation and competition from natural gas.
During its annual meeting last week, the financial services giant announced a new coal policy setting out plans to reduce lending to coal extraction companies and coal divisions of broader mining firms.
Andrew Plepler, the bank’s head of corporate social responsibility, said:
With regard to coal, over the past several years we have been gradually and consistently reducing our credit exposure to companies focused on coal mining. Our new policy reflects our decision to continue to reduce our credit exposure over time to the coal mining sector globally.
The announcement is the latest in a series of moves from large institutions and companies pointing to a wider fossil fuel divestment tendency.
Several universities and asset owners including the Rockefeller Foundation have been making arrangements to terminate their carbon intensive energy investments.
Earlier this week, the World Bank released the report ‘Decarbonising Development’, urging three key steps for a carbon-free future: the elimination of fossil fuel subsidies, a price on carbon, and the avoidance of decisions that lock in soon-to-be-obsolete fossil fuel infrastructure.
Bank of America said the new policy is due to the increased pressure from universities and environmental groups, such as the Rainforest Action Network (RAN) which had been campaigning against the bank’s involvement with the coal sector for the past four years.
The bank said in a statement:
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, while balancing the risks and opportunities to our shareholders and the communities we serve.
Amanda Starbuck, RAN’s energy programme director, described the announcement 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. In real terms, this means the bank is turning its back on the coal mining industry and committing to energy efficiency and renewable energy.