Bank of America reverses course on pledge to stop financing coal and arctic drilling projects

Bank of America appears to be reversing course on its pledge to end the financing of coal and arctic drilling projects, the New York Times reported Saturday.

In December 2021, the financial services company committed to stopping its direct financing of new coal-fired power plants, thermal coal mines, and arctic drilling. It also noted that it would no longer directly finance the expansion of existing projects.

In its “Environmental and Social Risk Policy Framework,” the company stated, “By 2025, we will phase out all financing (including facilitating capital markets transactions and advising on mergers and acquisitions) of companies deriving ≥ 25% of their revenue from thermal coal mining, unless the company has a public commitment to align its business (across Scope 1, 2 and 3 emissions) with the goals of the Paris Climate Agreement and the transaction would be facilitating the diversification of the company’s business away from thermal coal.”

“We will not directly finance petroleum exploration or production activities in the Arctic,” the framework added.

A December 2023 updated version of Bank of America’s “Environmental and Social Risk Policy Framework” appears to backtrack on those promises by stating it will exercise “due diligence” with the projects.

“Any client or transaction involving direct financing of oil and gas exploration or production activities in the Arctic must be escalated to the Senior-level Risk Committee for decisioning,” the most recent framework explained.

“As part of the enhanced due diligence process, we give consideration to whether a company has a public commitment to align its business… with goals of the Paris Climate Agreement and the transaction would be facilitating the diversification of the company’s business away from thermal coal,” it added.

Any initiatives involving new coal extraction or the expansion of existing coal extraction would also be escalated to the bank’s risk committee.

The latest framework walks back the bank’s pledge to “phase out all financing” of new coal projects by 2025 and instead states that the company is “on a trajectory to phase out such financing by 2025.”

Lucie Pinson with Reclaim Finance told the Times that Bank of America’s decision to backpedal on its previous commitments “sends a very bad signal” that “it’s OK to take up new fossil-fuel assets.”

In a statement to the Times, Bank of America explained that projects “that carry heightened risks will continue to go through an enhanced due diligence process involving senior level risk review.”

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