By Benjamin Collins

Last month, Bank of America published its 2014 Corporate Social Responsibility Report, which addressed the bank’s financing policies and practices in detail. This blog post looks back on the bank’s release of its updated coal policy in May, and looks at the strengths and weaknesses of the policy update and what it means for the banking sector’s financing of coal more broadly.


Bank of America’s new coal policy is both groundbreaking and imperfect. It acknowledges that the bank has a responsibility not only to finance the transition to low-carbon energy but also to cut financing for high-carbon energy sources. The policy goes well beyond comparable policies at the bank’s U.S. peers by committing to a broad cutback to BofA’s lending for coal mining both in the U.S. and internationally. However, this commitment lacks public-facing detail in terms of targets and deadlines, and fails to address the bank’s continued exposure to coal-fired power production. In spite of these flaws, Bank of America’s updated coal policy represents a clear step away from financing coal and a bold challenge to the bank’s peers in the months leading up to the Paris climate conference.


  • Statement of responsibility for addressing the climate impacts of BofA’s financing  Bank of America’s updated coal policy states that the bank “has a responsibility to help mitigate climate change by leveraging our scale and resources to accelerate the transition from a high-carbon to a low-carbon society, and from high-carbon to low-carbon sources of energy.” This symbolic statement of responsibility is commendable, as it acknowledges that the bank considers addressing climate change to be an obligation and not just an optional initiative.
  • Commitment to reduce financing for coal mining companies worldwide– The new policy commits the bank to “continue to reduce our credit exposure to coal extraction companies” and specifies that this commitment is global in scope. RAN will be monitoring Bank of America’s involvement with transactions with coal mining companies to verify that it is following through on this commitment.
  • Specific commitment to cut financing for producers of mountaintop removal coal – In addition to making a global commitment to cut exposure to coal mining, the policy specifically states that the bank will be cutting its exposure to companies that engage in mountaintop removal coal mining. RAN will also be tracking the bank’s follow-through on reducing its exposure to coal companies with mountaintop removal mining operations.
  • Additional environmental and human rights criteria for legacy coal mining transactions – The policy includes additional human rights, regulatory compliance, and environmental due diligence criteria to guide the bank’s assessment of any future transactions with its legacy coal portfolio.  


  • Lack of transparent deadlines and ambiguity about transaction types covered by the commitment – The policy does not include a clear timeline or deadlines for how the bank will proceed with its transition away from financing coal mining. Furthermore, the policy refers to the bank’s “credit exposure” and does not publicly specify how this commitment will apply to other corporate banking transactions other than loans, such as bond or equity issuance. However, RAN expects that BofA’s bond and equity underwriting exposure to coal producers will decline in tandem with its lending exposure to these companies, and we will be monitoring these transactions going forward.
  • Continued support for coal-fired power generation – Although BofA’s policy is bold on coal mining, it does not address coal-fired power generation financing. The policy’s discussion of coal-fired power focuses on monitoring and reporting on emissions from the bank’s electric power financing portfolio, which falls well short of the urgent need to phase out not only coal mining but coal power generation as well. Moreover, the policy includes a worrying endorsement of carbon capture and storage technology, which, if widely-adopted, would further entrench coal-based power production.
  • Need for a comprehensive approach to human rights and environmental due diligence – The bank’s disclosure of human rights, governance, and environmental due diligence commitments for its legacy coal finance portfolio is welcome. However, these issues are relevant not just to coal mining companies but to companies in other sectors as well. Therefore, Bank of America should disclose details of its human rights and environmental transaction screening processes for corporate clients in all high-risk sectors.

The Bottom Line:

With the window for avoiding the worst climate change emissions scenarios rapidly closing, 2015 will be a critical year for the climate. As the Paris climate summit approaches, the banking sector must act decisively to stop financing the production and burning of a fuel that is incompatible with a livable planet. Bank of America’s new coal policy is a major step in this direction. And with Crédit Agricole, Europe’s third largest bank adopting a similar policy later this spring, pressure is building on the rest of the industry to cut ties to coal. This summer and fall, RAN and over 75 other organizations are calling on global banks to meet and surpass Bank of America’s policy by committing to the Paris Pledge and ending financing for coal mining and coal-fired power production. The challenge to other U.S. banks is clear: It’s past time to stop financing coal.