Bank of America backtracks, now funding fossil fuels.

February 3, 2024
1 min read

TLDR: Bank of America Reverses Its Pledge Not to Finance Fossil Fuels

Bank of America has reversed its pledge not to finance fossil fuels, sparking controversy among climate activists. Two years ago, the bank made commitments to no longer finance new coal mines, coal-burning power plants, or Arctic drilling projects due to their environmental impact. However, their latest policy update indicates that these projects will now be subject to “enhanced due diligence” rather than an outright refusal of financing. This change follows increased backlash from Republican lawmakers, who are targeting businesses that consider climate change and the environment in their operations. The move by Bank of America reflects a broader trend of conservative criticism and the politicization of environmental, social, and governance (ESG) principles.

The backlash from Republican lawmakers against Wall Street and other corporations engaging in “woke capitalism” has prompted states like Texas, West Virginia, and New Hampshire to pass financial regulations aiming to protect fossil-fuel companies’ access to banking services. These actions have caused concern in the ESG world, leading to a record rate of big investors pulling money out of sustainability-focused funds. Larry Fink, CEO of BlackRock, a well-known advocate for ESG, even stopped using the term due to its politicization.

Bank of America, in a statement, clarified that projects with heightened risks would still undergo an enhanced due diligence process involving senior level risk review. However, the decision to reverse their previous commitments has drawn criticism from climate activists and raises questions about the bank’s stance on combating climate change. It remains to be seen how this move will impact Bank of America’s reputation in the ESG space and whether other financial institutions will follow suit.

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