Credit Policies

At Bank of America, our lending and investment activities sometimes have environmental liabilities associated with them. That's why we consider environmental sensitivity an important component of our credit, investment, underwriting and payment procedures. Although our policy requires that customers must be in full compliance with environmental laws and regulations, we have developed additional polices to further identify, evaluate and mitigate environmental risks for certain sectors or businesses.

Our environmental policies incorporate an Environmental Due Diligence process (EDD) that is typically conducted by a loan officer or relationship manager. Additional evaluation may be conducted by consultants or other outside experts and can range from simple questionnaires to very complex and lengthy evaluations that may include community input, geological, engineering and other investigations.

Our customers' adherence to our policy is typically reviewed by a credit officer. An additional audit process is used to evaluate compliance with bank polices and can be conducted at any time during the life of a financial commitment or loan.

Specific environmental liabilities and risks have resulted in detailed lending policies associated with higher-risk businesses. As an example, the U.S. Superfund law led to financial industry standards for due diligence associated with commercial real estate lending. Bank of America first developed specific environmental policies covering the commercial real estate and small business sectors in the early 1990s.

Our credit policy outlines the appropriate levels of EDD we must apply in order to mitigate risks from borrowers who may become subject to liabilities arising from regulatory actions, litigation or other conditions. The level of EDD we require in a transaction is based on a number of factors including the past and present use of real property (when real estate is involved) and conditions of the loan.

The Equator Principles
The Equator Principles are an industry best practice developed for financial institutions for purposes of managing environmental and social risk in large project finance transactions such as power plant, pipeline and dam construction. Although our business model does not generally reflect the types of transactions subject to the Equator Principles, Bank of America continues to support these principles as an industry best standard.

By encouraging the following of the Equator Principle guidelines, we help to ensure the development of financing for projects in a manner that is socially responsible and reflective of sound environmental management practices.

Developing Country and Indebted Poor Country (HIPC) Lending Policy
The developing country lending policy includes several additional due diligence considerations that are conducted to mitigate risks that might exist in developing countries due to a lack of regulatory structure, the presence of corruption or necessary considerations to address basic human needs. The policy is designed to favor the stability and prosperity that arise from political and economic democracy and political and economic systems in which participation is widespread, rather than limited to a privileged few.

Lending is especially aligned with enterprises focused on producing and improving products and offering services that enable communities to prosper.

Analysis includes scrutinizing for inefficiency and corruption, and the impact of the loan on the local population, the environment, the structure of culture and society, political systems, public health, economics and standards of living and the government's human rights record and policies.


Quick Facts

  • Environmental due diligence policies have resulted in the discovery of environmental liabilities and remediation of tens of thousands of properties in the U.S. since the early 1990s
  • Brownfield sites are urban and often abandoned sites with real or perceived environmental contamination.
  • Bank of America has developed an expertise in managing the risks associated with brownfield redevelopment and has helped bring thousands of these sites across the United States back into productive use.