This morning, Bank of America released its 2012 Corporate Social Responsibility (CSR) report, which falls well short of committing to the serious action we need from banks on climate change. Just ahead of the president’s climate speech tomorrow, which is anticipated to set reductions for emissions from existing power plants, it is disappointing to find that the bank is unwilling to take a leadership position on coal.
At its shareholder meeting last month, BofA faced a chorus of criticism from members of communities impacted by mountaintop removal coal mining in Appalachia, proposed coal export terminals in the Pacific Northwest, and air pollution from coal-fired power plants in Charlotte. So what did the bank say today in response to concerns about the devastating impacts of coal? Very, very, little. Unfortunately, Bank of America’s statements on coal in its CSR do not add up to a coherent strategy for addressing the environmental and health impacts of its coal financing.
Bank of America did, however, devote a full page in its CSR report to answering questions about its coal financing. For those who want to dig deep into BofA’s CSR report, our responses to their answers are below:
I. Why is Bank of America continuing to finance coal?
Bank of America’s Answer:
“If large financial institutions were to unilaterally discontinue financing the coal industry, it would have negative consequences for the U.S. and global economies. We have strongly supported policies to help transition to renewable, alternative and other low carbon solutions. We also are committing more money than any other financial institution to reduce energy consumption and support renewable and alternative energies — $70 billion. And, we’re working with our clients in the fossil fuel value chain to help them transition to a lower-carbon economy.”
There are several cost-effective pathways to transition the U.S. away from fossil fuel-fired electric power, but Bank of America’s ongoing financing relationships with the coal industry perpetuates a dangerous and unsustainable status quo. Furthermore, Bank of America’s engagement with coal sector clients has not been effective, as several of its clients have moved in the wrong direction on coal last year. For example, Arch Coal continues to apply for new permits to blow up mountains, and the Tennessee Valley Authority is seeking to extend the life of its aging coal fleet.
The future of the US energy mix is up for grabs, and without transparent targets and deadlines for phasing out its coal financing, Bank of America will continue to put U.S. communities and the climate at risk. Bank of America’s renewable energy lending commitment, though a step in the right direction, falls well short of a comprehensive strategy for addressing the carbon impacts of its lending and financing.
II. Does Bank of America bank with companies who engage in mountaintop removal?
Bank of America’s Answer:
“In 2008, we assessed the regulatory and legal framework related to MTR and determined it presented risk to clients who were significantly engaged in the practice. We implemented a policy to phase out relationships with clients whose business was predominantly focused on MTR mining. Since then, regulators have put better permitting and monitoring practices in place, and industry consolidation has lowered client exposure to MTR. We continue to work with all stakeholders on this issue.”
The short and clear answer is, YES. Even with its MTR commitment (which sets a limit on a client company’s MTR involvement at 50% of total coal production—a threshold high enough to be effectively meaningless), Bank of America provided more than $1.3 billion to companies that engage in the practice in 2012.
RAN has provided Bank of America’s environmental team with compilations of peer-reviewed studies that demonstrate that the idea of “better” MTR mining is a myth. Members of several communities in Appalachia have also spoken directly to the bank’s CEO at several shareholder meetings about the health and environmental impacts of Bank of America’s MTR clients on their communities. Yet Bank of America’s coal policy claims—without any supporting evidence—that MTR “can be conducted in a way that minimizes environmental impacts in certain geographies.” Nor is there evidence that what the bank characterizes as “better permitting and monitoring practices” are reducing the documented environmental and health impacts associated with the practice.
In reality, mounting evidence has linked MTR to health impacts ranging from cancer to birth defects; state regulators have systematically failed to enforce environmental regulations at MTR sites; and a United Nations delegation has called for investigations into potential human rights violations by MTR companies related to the right to health and the right to water.
III. What is Bank of America doing to influence public policy in this area?
Bank of America’s Answer:
“We are engaged with policy makers, clients and environmental advocates on these issues. We supported federal cap and trade legislation when it was under consideration a few years ago. When the prospects of federal legislation dimmed, we turned efforts to the states and regions. We still fundamentally believe that to effectively address climate change, there needs to be a cost to emitting carbon pollution.”
Political gridlock does not excuse Bank of America’s irresponsible lending choices, which provide a financial lifeline to the struggling coal industry. Climate science demands that Bank of America rapidly phase out financing of coal-fired energy. According to the International Energy Agency, if investment in fossil fuel-powered energy infrastructure continues on its current course through 2017, the world will be locked into a path towards catastrophic and irreversible climate change.