Providing that support will be critical, as individual companies will need to demonstrate measurable progress towards net zero as they seek financing. “If you’re a traditional energy company thinking about how to develop renewables,” says Fang, “we’ll help you build a plan for solar and wind.”
A route to sustainability
For an undertaking that involves nothing less than transforming the global economy, no industry or company can be left to figure things out on its own. “While financing is critical, so, too, is education,” says Fang. Business groups, governmental agencies and nonprofits offer a growing array of educational resources tailored to individual industries. For example, the U.S. Green Building Council (USGBC) advises developers on how to include environmentally efficient systems in buildings, helping to make communities and cities more sustainable.
Because of their financial reach and expertise, global banks have a unique role to play in that education process. Bank of America has established a carbon advisory program to teach business clients about climate-related products and services. The group takes a holistic look beyond financing the transition, including the impact of jobs in high-carbon industries such as coal or oil phasing out. Some 65 million new jobs could emerge in the next decade, requiring new technical skills and training.
“Every business has unique challenges. We go across the spectrum of clients, to understand what their businesses are, and where their sustainability opportunities are,” adds Fang. To better support clients that need guidance along with financing, bank employees are receiving training on climate awareness and how to help specific industries decarbonize. High-emitting industries — steel and cement production, for example — will need help implementing technologies such as carbon capture. Instead of CO2 being released into the atmosphere, emissions are captured and transported to areas where they can be safely stored underground, or repurposed to create building materials, industrial chemicals and other products.
“Other businesses will need guidance and financing to electrify their fleets of cars and trucks, or retrofit their buildings,” says Liftman. The aviation industry, for example, will require significant investment in sustainable fuels and more efficient planes. While the costs are significant, the cost of inaction is even greater. In a business-as-usual scenario, aviation alone could use up to 10% of the planet’s remaining global carbon budget by 2050. “We are very engaged with all of our clients because we see opportunities across all sectors, but in particular, with clients in high-emitting sectors,” adds Liftman.
A shared commitment
Individually, companies can contribute to achieving net zero in many different ways, and Bank of America’s commitment to the environment is long-standing. In 2005, it was the first U.S. bank to announce a Scope 1 and 2 greenhouse gas emissions reduction goal with the Environmental Protection Agency Climate Leaders program. In its operations, it achieved carbon neutrality in 2019, a year ahead of schedule, and in 2021 it set a goal of net zero before 2050. In April 2022, Bank of America announced its 2030 targets for reducing emissions associated with financing activities related to three key sectors: auto manufacturing, energy and power generation. The targets are outlined in the company’s Approach to Zero™, which details Bank of America’s net zero greenhouse gas emissions approach and target-setting process.
A collective, global effort combining the commitments of all companies and industries can greatly accelerate progress toward net zero, however. Through collaborative efforts such as GFANZ, Bank of America and more than 450 other firms representing $130 trillion in assets are working together to put the power of capitalism to work at an unprecedented scale to address climate change. Addtionally, the Partnership for Carbon Accounting Financials (PCAF), formed in 2020, is developing more precise ways to measure and disclose greenhouse gas emissions that result from financing of businesses. “In collaboration with other financial institutions, we helped create the Global GHG Accounting and Reporting Standard for the Financial Industry, providing a consistent methodology to assess and disclose emissions associated with financing activities,” says Liftman.
According to Fang, clients are increasingly embracing net zero planning across a wide spectrum of sectors. “Even though net zero is a new journey for all of us, I have yet to find clients resisting it,” she says. “The taxonomy can be confusing, but they are actively engaged, and open to help, in making the transition.”
Net zero financing will be an essential tool as the world embarks on its countdown to creating a net zero world by 2050. Bank of America is committed to putting the power of capitalism to work to address not just the challenges facing the environment, but also those that contribute to inequity in health care, economic opportunity and access to education, as well as other contributors to social inequality.
Learn more about Bank of America’s commitment to Sustainable Finance.