Bank of America – Fossil Fuel Financing (2017)
Outcome: Successfully withdrawn following a commitment from the company to continue substantive dialogue on this issue.
Climate change is a global challenge that continues to gain widespread attention for its numerous, significant environmental, economic, and social impacts. Most notably, in December 2015, political leaders from 195 nations signed an agreement in Paris to limit global temperature rise to below 2°C above pre-industrial levels, ideally striving to limit warming to 1.5°C. This agreement entered into force in November, 2016.
Bank of America (BAC) pledged support for a strong outcome in Paris as a founding signatory to the American Business Act on Climate and subsequently lauded the outcome – in its 2015 ESG Report BAC states: “…we applaud government, business, and non-governmental organization leaders for achieving this agreement. The agreement helps spur the conversation with investors to increase and reallocate capital from high-carbon to low-carbon investments.”
Bank of America has a commitment to provide $125 billion in financing for low-carbon and other sustainable businesses by 2025. BAC’s Vice Chairman has said this commitment is part of its effort to “be a leader in clean energy investment” and that BAC’s “analysts estimate the [clean energy] sector will grow by $13 trillion by 2030”. Simultaneously, BAC has worked to reduce financing to certain high-carbon fossil fuel activities. In its Coal Policy, BAC states: “Going forward, Bank of America will continue to reduce our credit exposure to coal extraction companies.”
Coal is, of course, only one fossil fuel. According to the 2016 report, “Shorting the Climate”, BAC continues to be a significant financier to companies involved in other high-carbon fossil fuel activities – coal-fired power plants, liquefied natural gas (LNG) export terminals, and “extreme oil” (Arctic drilling, Canadian tar sands extraction, and ultra-deep water offshore drilling). “Shorting the Climate” connects Bank of America to nearly $25 billion and $30 billion in financing for companies involved in “extreme oil” and LNG export terminals respectively between 2013 and 2015.
Oil and gas pipeline projects carry added reputational risk. BAC recently received criticism for providing over $350 million in revolving credit to the companies behind the controversial Dakota Access Pipeline.
Bank of America’s financing of companies involved in these high-carbon, high-cost activities stands to undermine the efficacy of its otherwise ambitious low-carbon initiatives, placing BAC’s reputation as an environmental leader in jeopardy.
Resolved: Due to the significant climate, reputational, and financial impacts of fossil fuel financing, shareholders request Bank of America:
1. Broaden its Coal Policy to include reducing credit exposure to companies materially involved in constructing and/or operating coal-fired power plants; LNG export terminals; oil and gas pipeline projects; Arctic oil and gas drilling projects; Canadian tar sands extraction and production projects; and/or ultra-deep water offshore oil and gas drilling projects.
2. Establish a time-bound commitment to fully eliminate credit exposure to companies materially involved in each of the fossil fuel activities mentioned he