The environmental effect of new coal mines, coal-burning power stations, and Arctic drilling projects has led financial services provider Bank of America to return to its previous vow to stop funding these projects.
According to the bank’s most recent environmental and social-risk policy, revised in December, such projects would undergo “enhanced due diligence.” This shift occurs as Republican politicians are becoming more hostile toward businesses that take social and environmental concerns into account. Some states have enacted financial legislation to prevent fossil fuel businesses from accessing banking services. Additionally, politicians in certain states have attempted to criminalize the E.S.G. business philosophy, which stands for environmental, social, and governance.
Additionally, the bank has reduced its support for coal, an alleged key ingredient in climate change, and for the Arctic, a one-of-a-kind area that demands special attention due to its particular characteristics, such as its delicate ecology, the rights of Indigenous Peoples, and the well-being of marine and animal life. No specifics on the scope of the bank’s risk assessment were provided.
JPMorgan Chase has declared a new “energy mix” goal, including funding for renewable energy projects, replacing its previous oil and gas emissions reduction aim. Claiming that JPMorgan was trying to hide its true intentions, environmental organizations quickly condemned the shift. Banks are shifting their attention away from E.S.G. and toward energy security due to global tensions in the Middle East and Europe.
Coal, oil, and gas firms were getting a lot of funding even before the most recent reversals. A coalition of advocacy groups that assess the financial institutions’ stances on climate change found that the 60 biggest banks in the world had lent a total of $669 billion to fossil fuel projects in 2022. According to the International Energy Agency, the most devastating consequences of climate change may be avoided if countries immediately cease authorizing new coal-burning power stations and new oil and gas resources.
Bank of America’s reversal sends a negative message to customers that it is OK to acquire further fossil-fuel assets, which has consequences beyond the loan itself.
