Climate Change
Global climate change represents one of the greatest challenges faced by our society. How we address this challenge today will have important impacts on current and future generations.
At Bank of America, we made a 10-year, $20 billion commitment in 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 very clear: we must reduce our greenhouse gas (GHG) emissions and move towards a low-carbon economy. Actions must be taken now to slow, stop and reverse the growth of GHG emissions to the atmosphere. 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 believe addressing climate change is our responsibility. And, as a corporation, we are taking full advantage of the business opportunities created by "green" economic growth. By providing critical 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 GHG 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.
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.
Utility Portfolio Emissions. Bank of America recognized that many utility customers were addressing 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 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 impacts.
Helping to Shape Public Policy. We support a stable and predictable regulatory environment with a bias toward clean energy and a low carbon economy. That's why we encourage Congress to legislate a cap-and-trade framework for carbon emissions that would create a market-based infrastructure for setting a value on carbon allowances. We also need a clear, federal standard for GHG reductions that would give investors the certainty they need to plan for the future.
Reductions Begin Here. And finally, we are committed to do ourselves what we ask of others. Bank of America has set an aggressive voluntary goal to reduce greenhouse gas emissions across the company 9 percent by 2009 through the reduction of energy consumption. We have made this commitment through the EPA Climate Leaders Program and through a legally binding commitment to the Chicago Climate Exchange.
