Bank of America recently backtracked on a commitment to divest from the coal sector and Arctic drilling projects.
What happened?
Two years ago, The New York Times reported that Bank of America would no longer finance new coal mines, coal-burning power plants, or Arctic drilling projects because of their environmental impacts. Now, the bank has apparently taken it back — its latest environmental and social-risk policy says these types of projects will instead be subject to “enhanced due diligence.”
The move comes amid increasing backlash from Republicans against corporations that consider environmental and social factors in their operations, the Times reported. This includes new financial regulations in Texas and West Virginia designed to push back against efforts that would deny fossil fuel companies access to banking services. In New Hampshire, state lawmakers even want to make ESG, or environmental, social, and governance, illegal as a business practice.
This political climate combined with global conflicts in Europe and the Middle East are driving banks such as Bank of America and JPMorgan, which also backtracked in its annual climate report, away from ESG and toward more energy security-driven practices.
Why is this change concerning?
By 2022, the world’s 60 largest banks had provided a collective $669 billion in financing to coal, oil, and gas companies, according to the Times, referring to reporting from a group of advocacy organizations that tracks banks’ records on climate.
Meanwhile, the burning of fossil fuels is the biggest contributor to the overheating of our planet. According to the United Nations, warmer temperatures over time are changing weather patterns and disrupting the balance of nature.
For instance, climate change supercharges weather events such as hurricanes, droughts, and heat waves, making them more frequent and severe.
Already, we are seeing the effects of these shifts. For instance, all areas of the Amazon basin dealt with drinking water shortages after their lowest rainfall total in decades in summer 2023, and in the Catalonia region of Spain, a state of emergency was declared earlier this year over the “worst drought in modern history.”
What’s being done about dirty energy investments in the financial industry?
Cambridge University is already taking a stand, as it’s considering severing its history with Barclays because of the bank’s refusal to stop financing new oil and gas projects. Similarly, Leeds University switched to Lloyds, saying it has the lowest investments in dirty energy among major U.K. banks.
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You can make a difference by banking with institutions that are making good on environmental commitments and staying away from banks that invest in dirty energy such as Chase, Citi, Wells Fargo, and Bank of America. You can browse over 30 banks featured by the organization Bank for Good.
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Source: thecooldown.com
