Bank of America to cut fossil fuel lending
New announcement is latest in a series of moves that point to a wider fossil fuel divestment movement
Bank of America will cut its lending to the coal sector in a bid to reduce its financial exposure to fossil fuels, citing the future risk posed by greater regulation and competition from natural gas.
The financial services giant held its annual meeting last week and announced a new coal policy which sets out plans to reduce lending to coal extraction companies and the coal divisions of broader mining firms.
Andrew Plepler, the bank’s head of corporate social responsibility, said: “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 that point to a wider fossil fuel divestment tendency.
A variety of universities and asset owners including the Rockefeller Foundation are pulling out of carbon intensive energy investments.
In April, HSBC said the recent fall in energy prices has “put a spotlight on stranded fossil fuel assets, making them a risk to investors."
In a client research note HSBC also outlined some of the aspects of the divestment movement: “As rigs are dismantled, capex is cut and operating assets quickly become unprofitable, stranding risks have become much more urgent for investors to address, including shorter term investors."
Bank of America said the new policy is due to increased pressure from universities and environmental groups, such as the Rainforest Action Network (RAN).
In statement the bank said: “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."
RAN has described the announcement as representative of a "sea change" in the investment world and Amanda Starbuck, RAN’s energy programme director, said: “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.”
