ENVIRONMENTAL SUSTAINABILITY

Governance & Policies

Our policies provide transparency and clarity about our position on environmental issues.

Environmental Governance and Policies

Our environmental activities are overseen by our Environmental Council, which sets our strategy, priorities and goals. The council is also responsible for providing oversight, accountability and resources for company-wide implementation and driving greater integration across business lines. The council is comprised of business leaders from across our organization, including several executives who report directly to our CEO.

Our Leadership

Cathy Bessant, Chair, Bank of America Environmental Council
Catherine P. Bessant, our Global Technology and Operations Executive, is a member of the company’s executive management team and chair of our Environmental Council. In addition to her responsibilities for delivering end-to-end technology and operations across the company, Cathy leads executives from across the company in providing oversight, accountability and resources in support of our $50 billion, 10-year business initiative to address climate change through lending, investments, capital markets activity, philanthropy and operations.

Bank of America’s New Environmental Business Commitment

We completed our $20-billion environmental business initiative ahead of schedule. Starting in 2013, our new environmental business goal will be $50 billion over 10 years. The initiative addresses climate change through our lending, investing, products and services, philanthropy, and also by enhancing the efficiency of our own operations. As part of the goal, we have initiated hundreds of transformational transactions in the U.S. and around the world. These include financing energy-efficiency projects for schools, housing developments and commercial construction. We have also provided access to capital for companies investing in wind, solar, clean water and other emerging technologies. As the importance of sustainability and environmental stewardship expands into other business sectors, we are expanding our work as well. From financing hybrid and electric vehicles to socially responsible investment portfolios for families and individuals, we are actively bringing forward environmental business opportunities to benefit all of our clients and our world.

Global Environmental Group

As part of our commitment to positive environmental change, we have established a dedicated internal team that works full-time on our environmental initiatives. The Global Environmental Group focuses on four strategic areas: Transformational Finance, Employee Programs, Operations and Risk Management. The Global Environmental Group identifies and helps to actualize emerging trends that present new opportunities for the bank. The group establishes environmental targets for the company, including our GHG emissions reduction goal, while ensuring resources across the company are informed and mobilized to meet those targets. They also manage the environmental employee engagement programs, like our My Environment Ambassadors. Their work includes working with partners on philanthropic grants, developing and updating policy, and serving as subject matter experts with internal and external partners.

About Our Policies

Bank of America maintains a range of environmental policies related to climate change, forests, energy, environmental lending and beyond. Our policies are available to provide transparency and clarity about our position on important environmental issues.

  • Climate Change

    DownloadClimate Change PDF

    Global climate change represents one of the greatest challenges faced by our society. How we address this challenge today will have important repercussions on current and future generations.

    We made a 10-year, $20-billion commitment to lending, investments, products and services focused on addressing climate change. As the first bank to make a long-term commitment to address climate change through our financial products and services, we set and continually pursue meaningful targets and actions that are compatible with our business goals.

    Toward a Low-Carbon Future

    What needs to be done is clear: we must reduce our greenhouse gas emissions and move towards a low-carbon economy. This will be achieved through a fundamental, historic and dramatic shift in how we produce and use energy.

    The changes necessary to achieve this goal require capital and resources, areas where Bank of America can play a productive — and profitable — role. That's why we are aligning our capabilities as a financial services provider to this challenge while also considering our ability to shape public policy.

    We have a role in addressing climate change. And, as a corporation, we are taking full advantage of the business opportunities created by "green" economic growth. By providing financing to encourage the development of environmentally sustainable products and technology, by accelerating the deployment of existing technology and by increasing energy efficiency, we will help to achieve the GHG reductions that are necessary.

    Managing Risk

    One of the biggest challenges we face is to understand the cost that greenhouse gas emissions represent to business. The competitive and regulatory environments for the energy sector are changing, and so are the risk formulas banks use to finance the industry. The Carbon Principles and our Utility Portfolio Emissions are two examples of how risk management can be eminently compatible with environmental goals.

  • Energy Policy

    One of the most significant challenges our world faces is to develop secure, clean and affordable sources of energy to power our society, grow our economies and protect the environment. In pursuit of that goal, we have developed policies that promote the efficient production, conversion, delivery and consumption of energy to help make the necessary transition to a sustainable energy future.

    Our $20 billion environmental commitment is providing focused products, services, lending and investments targeted at the needs of customers who are developing and implementing new efficient technologies and zero- and low-carbon energy to build and grow our society.

    The policies and practices we have instituted cover a wide range of activities, including lowering carbon emissions while maintaining a reliable and diverse fuel mix. They include the increased development of renewable energy sources and transportation technologies that enhance energy security. Our policies and practices also encourage the growth of zero-carbon emitting energy sources, such as nuclear power and wind.

    We fund advanced technologies that reduce the carbon emissions produced by the burning of fossil fuels, with a particular emphasis on technologies that capture carbon from fossil fuel plants and then sequester that carbon in geologic reservoirs. To further promote these actions, we partner with coal producers, utility companies, leading universities and the environmental community to develop the necessary elements aimed at implementing Carbon Capture and Storage (CCS) on a global scale. We recognize that CCS technologies will be necessary for addressing global climate change while enabling economies to flourish.

    We are also funding the development of advanced technologies that work to improve energy efficiency in power generation and transmission, as well as technologies that improve consumers' efficient use of power.

    We strongly believe that, through our policies, we can help to create a future where we all enjoy a robust economy, as well as a clean, healthy environment.

  • Credit Policy

    Our lending and investment activities sometimes have environmental liabilities associated with them. That's why we consider environmental sensitivity an important component of our credit, investment, underwriting and payment procedures.

    Although our policy requires that customers are in full compliance with environmental laws and regulations, we have developed additional policies to further identify, evaluate and mitigate environmental risks for certain sectors or businesses.

    Our environmental policies incorporate an Environmental Due Diligence process (EDD) that is typically conducted by a loan officer or relationship manager. Additional evaluation may be conducted by consultants or other outside experts and can range from simple questionnaires to very complex and lengthy evaluations that may include community input, geological, engineering and other investigations.

    Our customers' adherence to our policy is typically reviewed by a credit officer. An additional audit process is used to evaluate compliance with bank policies and can be conducted at any time during the life of a financial commitment or loan.

    Specific environmental liabilities and risks have resulted in detailed lending policies associated with higher-risk businesses. As an example, the U.S. Superfund law led to financial industry standards for due diligence associated with commercial real estate lending. We first developed specific environmental policies covering the commercial real estate and small business sectors in the early 1990s.

    Our credit policy outlines the appropriate levels of EDD we must apply in order to mitigate risks from borrowers who may become subject to liabilities arising from regulatory actions, litigation or other conditions. The level of EDD we require in a transaction is based on a number of factors including the past and present use of real property (when real estate is involved) and conditions of the loan.

  • Forests Lending Policy

    Download Forests Lending Policy PDF

    We recognize forests as vital resources in the global carbon cycle including helping to mitigate global climate change. We developed our forest lending policy in consultation with our customers who have expertise in the sector as well as with environmental partners who work on developing best practices, including forestry certification. Our forest lending policy places additional value on forestry certification by incorporating it as a due diligence tool.

  • Developing Country Lending Policy

    Download Developing Country Lending Policy PDF

    The Developing Country Lending Policy includes several additional due diligence considerations that are conducted to mitigate risks that might exist in developing countries due to a lack of regulatory structure, the presence of corruption or necessary considerations to address basic human needs. The policy is designed to favor the stability and prosperity that arise from political and economic democracy and political and economic systems in which participation is widespread, rather than limited to a privileged few.

  • Paper Procurement Policy

    Download Paper Procurement Policy PDF

    We understand the impact associated with our own operations. We're committed to applying the same lending requirements for our customers as we have for our own purchases of forest products, especially paper. In order to reduce demand on forests, we continually build on our long-standing commitment to minimize consumption of paper products. When procuring paper products containing virgin wood fiber, we require suppliers to use environmentally preferable practices that ensure the source forests from which fiber is procured are managed properly. Our paper procurement policies mandate minimal use of paper containing virgin wood fiber.

  • Position on Forest Certification

    Download Position on Forest Certification PDF

    Forest certification is the most effective tool available to leverage our lending and procurement to promote sustainable forests and to document that our policies are being met. We require that our forest products suppliers document the sustainability of their fiber sources and obtain third-party certification in accordance with an acceptable forest certification standard.

    We believe certification standards must have certain fundamental components. They must:

    • Be credible, independent and widely accepted
    • Set rigorous forest and land management standards
    • Protect biodiversity, endangered species and other conservation values
    • Require third-party auditing
    • Provide a mechanism for chain-of-custody documentation
    • Be transparent

     

    We recognize that there is sometimes disagreement within the forestry and environmental communities about which standard is most appropriate for forest management, particularly for forests in North America. But in our view, the Forest Stewardship Council (FSC), the Sustainable Forest Initiative (SFI), the Canadian Standards Association (CSA) and other credible forest certification standards meet the majority of these criteria.

    We have observed the application of each of these standards on the ground in the forests, and we have carefully reviewed comparisons of these standards by Yale University, the Pinchot Institute, the Meridian Institute and others. It appears that some standards are better suited to certain forest regions and landscapes than others, and some are more practical than others. The FSC Standard, for example, is widely accepted by the environmental community and is especially recognized for protecting social values and community rights (although these are less critical issues in developed countries), while the majority of forestland is certified to other standards in the United States.

    Our approach is to try to adopt the best components of each standard. To be the leader in sustainable paper, our goal is to document the general sustainability of our suppliers.

    But our society has a long way to go, because no single forest certification system yet comes close to certifying enough U.S. forest acreage to supply the variety of paper grades that we and our customers need. The reason is inescapable and is unlikely to change soon: the overwhelming percentage of forestland in the United States (70 percent) is owned by private non-industrial landowners, most of whom are currently indifferent to certifying their forestlands to one or any of the standards. At Bank of America, we strive to leverage our procurement program through the supply chain to create a market for certified forest fiber by providing the independent forestland owner an incentive to certify their forests. Bank of America’s goal is to accelerate this process by procuring forest products whose fiber is third-party certified according to a credible, independent and widely accepted standard like the FSC, SFI and CSA standards.

  • The Equator Principles

    Download The Equator Principles PDF

    The Equator Principles are an industry best practice developed for financial institutions for purposes of managing environmental and social risk in large project finance transactions such as power plant, pipeline and dam construction. Although our business model does not generally reflect the types of transactions subject to the Equator Principles, Bank of America continues to support these principles as an industry best standard.

    By encouraging the following of the Equator Principle guidelines, we help to ensure the development of financing for projects in a manner that is socially responsible and reflective of sound environmental management practices.

  • The Carbon Principles

    In 2008, Bank of America, along with other financial institutions, committed to assess the cost of carbon in risk and underwriting processes. Our industry worked with utility clients and environmental groups to develop the Carbon Principles, a due diligence standard now considered to be a best practice for evaluating financing for companies that are considering new power plant construction and for ensuring that the long-term costs of carbon are being taken into account even in the absence of regulation.

  • Coal Policy

    Download Coal Policy PDF

    As Bank of America expands our support and commitment to energy efficiency, renewable energy, and other low-carbon energy sources through our lending, investments, products and services, and operations, we recognize that at the present time, fossil fuels, and coal in particular, will continue to supply a significant amount of the energy needed to power our society.

    There are environmental and other impacts associated with any energy source. For coal, these impacts result from extraction, processing and combustion. Bank of America continues to engage key stakeholders including coal producers, utility companies, leading universities, and the environmental community on energy, coal, the environment, and the necessary technologies to promote low-carbon energy. From these discussions, we have developed a policy that will ensure that Bank of America plays a significant role as a leading financial services company in promoting the responsible use of coal. Our policy is focused on the following elements:

    Technology

    Advanced technologies such as carbon capture and storage that capture carbon from fossil fuel plants and then sequester that carbon in geologic reservoirs will be necessary for addressing global climate change while enabling economies to flourish. Through our partnerships we will promote the necessary conditions for implementing carbon capture and storage on a global scale. We will employ our resources as a financial institution to promote the development and deployment of these advanced technologies to reduce the carbon emissions produced by the burning of fossil fuels.

    Financial Services Policy

    We will support, adopt, and adhere to leading practices for managing the environmental impacts associated with coal. Bank of America has taken a leadership position by committing to the Carbon Principles and reducing emissions associated with our utility portfolio as best practices for managing risks associated with coal.

    Extraction

    Bank of America is particularly concerned about surface mining conducted through mountain top removal in locations such as central Appalachia. We therefore will phase out financing of companies whose predominant method of extracting coal is through mountain top removal. While we acknowledge that surface mining is economically efficient and creates jobs, it can be conducted in a way that minimizes environmental impacts in certain geographies.

  • Utility Portfolio Emissions

    We recognize that many utility customers address the emissions of their energy fleet and taking actions to reduce their emissions intensity. In a commitment to support these best practices, we instituted a similar evaluation of our overall U.S. utility portfolio. In 2004, we began to consider the emissions profile of the power utilities to which we extend credit. We committed to reducing the overall emissions rate of the portfolio 7 percent by the end of 2008. This metrics-based approach helped us to understand ways we could manage the carbon intensity of a client portfolio, while remaining in alignment with utility clients that are focused on reducing their own carbon footprints. We met this goal and continues to report annually on the emissions profile of our U.S. based utility portfolio.

    U.S. Power Utility Portfolio Emissions Reporting

    Carbon dioxide (CO2) emissions from the U.S. electric power sector represent approximately one-third of all U.S. greenhouse gas (GHG) emissions and about 40% of all U.S. energy-related CO2 emissions. Between 1990 and 2009, these emissions grew by more than 18 percent1. Increases in the efficiency of electric power plants and shifts in fuel used from coal to natural gas or zero-emitting fuels, such as nuclear and wind power, have the potential to reverse this trend and lower emissions from the utility sector.

    In 2004, Bank of America began considering the emissions profile of the utilities to which it extends credit. The bank committed to reducing the emissions rate of the companies in its utility portfolio 7% by the end of 2008. The bank achieved this goal and has maintained progress through two primary factors: 1) A shift in lending away from some of the highest emitting companies in the portfolio and the addition of lower emitting companies; and 2) A reduction in the emission rate of the other companies remaining in the portfolio.

    Measuring the carbon intensity of the utility portfolio helps Bank of America manage risk related to climate change, especially in the absence of national GHG emissions regulation in the United States.

    Bank of America will continue to measure the carbon intensity of the portfolio and report annually on these metrics and will re-evaluate its reporting when national regulation of GHG emissions is established.

    Methodology

    The following describes the methodology used by Bank of America to calculate its emissions reduction commitment in the utilities portfolio:

    • Bank of America defines the utility portfolio as all electric generators with whom the bank has significant lending/ credit relationships.
    • Obtain electric generation data (expressed as Megawatt hours (MWh) for firms representing at least 75% of total generation in the portfolio.
    • Obtain CO2 emissions data for the same firms that represent 75% of total electric generation.
    • Add the generation from each of the firms together to estimate total MWh for the portfolio.
    • Add the emissions from each of the firms together to estimate total CO2 for the portfolio.
    • Divide total CO2 for the portfolio by total MWh to estimate CO2 emitted per MWh generated.

    The most recent sources of data are used for the calculations. Data are derived from various sources, including U.S. Environmental Protection Agency (USEPA), Emissions and Resource Generation Integrated Database (eGRID); U.S. Energy Information Administration, Form 906 database; Company annual and environmental reports; and utility industry emissions reporting from the non-profit coalition Ceres.

    About the Data Set

    The bank's methodology for estimating emission rates focuses on the largest electricity generators in its portfolio. These firms are the most likely to report electric generation and CO2 emissions publicly. Use of these data maintain transparency and minimize tracking costs, maintaining consistency in application of methods.

    Together, these largest generators represent 75% of the total estimated generation from the bank's utility portfolio. Because the largest generators will be providing base-load (24-hour provision of electricity), they are often coal-fired (a lower-cost form of generation). Smaller generators often use higher-cost natural gas and renewables such as wind, photovoltaics and biomass. Thus, it is likely that the largest generators have emission rates above those of the smaller generators.

    The bank tests this hypothesis by performing spot checks on companies outside the large generator data set and has found their emission rates equal to or lower than the collective emission rates of the largest generators.

    Why Target a Decline in Emission Rates?

    Greenhouse gas emissions (GHG) performance is typically measured on an absolute basis, focusing on the change in aggregate emission levels or on an intensity basis, represented by a rate of emissions per unit of output such as Megawatt hours (MWh).

    Emission rates (an intensity measurement) are the most accurate representation of the emissions performance of a utility portfolio. These rates minimize the impact of circumstances unrelated to a utility’s environmental decisions such as:

    • Weather Variation—Warmer than normal summers or cooler than normal winters can increase demand for electricity and overall emissions.
    • Demand Growth—Increases in population and economic activity increase electric demand that must be met by the local utility through generation or power purchases.
    • Mergers and Divestitures—When a company acquires additional generating capacity, the apparent absolute emissions of the company grow, while the decrease in emissions from the company selling the generating units remains unaccounted for.
    • Outages for Maintenance—When a company reduces electric generation to perform maintenance, it still needs to meet electric demand, so it purchases electricity from another generator. This lowers the company’s apparent emissions which have been shifted to the other company now providing the electricity.

    In contrast to absolute emission estimates, emission rates will mute the effects of these external factors on environmental performance.

    • Emissions data are available from the US Environmental Protection Agency (EPA) through 2009. The electric power sector had seen growth as high as 33 percent over 1990 levels (in 2007). Total emissions, including emissions from the electric power sector, dropped markedly in 2009 as a result of the economic downturn, and the most current data available reflect this decline.
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Transformational Finance

Transformational Finance 

Our 10-year, $50-billion environmental initiative is a catalyst for accelerating low-carbon activities for the businesses, institutions and customers we serve.

Operations

Operations 

We manage our operations, and those of our vendors, with environmentally sound practices and ambitious targets.

Employee Programs & Partnerships

Employee Programs & Partnerships 

We enable our employees to act as environmental stewards by helping them to conserve resources.