Bank of America targets net-zero financed emissions and supply chains by 2050
After being accused by investors and green groups of continuing to finance high-carbon projects, Bank of America has pledged to reach net-zero emissions across the projects it finances and its supply chain by 2050.
The banking giant has also set a commitment to reach net-zero operational emissions by 2023. It achieved carbon neutral operations in 2019 and will now work on further internal emissions reductions, to reduce the amount of offsetting needed.
A first step Bank of America’s plans for reaching net-zero financed emissions is to begin disclosing financed emissions on an annual basis, beginning in 2023 at the latest. The firm will use this data to inform the development of “interim science-based emissions targets for high-emitting portfolios” including holdings in the energy sector.
At the same time, the bank will increase its capital allocation to low-carbon sectors including bioenergy, renewable energy, clean hydrogen, nature-based solutions, waste-to-energy, green agri-tech and carbon capture, usage and storage (CCUS). It will also scale up finance for improving water infrastructure.
Bank of America has not yet updated its exclusions policy or confirmed any plans to do so. Its plans are focused more on engagement than on divestment; it said in a statement that it will “partner closely with its clients to finance the adoption of low-carbon solutions, including resource-efficient building construction, renewable energy, sustainable transportation such as electric vehicles and charging infrastructure and resource-efficient agriculture”.
The new climate goals from the bank come after it joined the Partnership for Carbon Accounting Financials (PCAF) last year. PCAF is aiming to develop a global accounting standard – for use in the financial sector – to improve portfolio transparency of greenhouse gas emissions attributed to financing activities. More than 70 major financial firms, collectively managing more than $9trn of assets, are PCAF members.
Bank of America claims that it has been supporting the Paris Climate Agreement since it was ratified in 2015. But the recent ‘Banking on Climate Change’ report claimed that the firm has provided billions of dollars to the fossil fuel sector, without environmental conditions attached, over the past five years. As well as high emitters, the bank, like many of its peers in the US market, is facing increasing pressure to reduce exposure to corporates with high deforestation risks and those implicated in plastic pollution scandals.
Supply chain focus
Aside from financed emissions, the supply chain is a major source of climate impact for Bank of America.
Its updated climate strategy includes commitments to shift to 100% zero-carbon electricity across the supply chain and to help all suppliers reduce Scope 1 (direct) and 2 (power-related) emissions by 75% by 2030. Energy efficiency will play a major role, with a new target to reduce energy consumption by 55%.
Suppliers will also be required to align with Bank of America’s operational targets on water, waste and resources for 2030. These include reducing potable water use by 55%, diverting 75% of construction and demolition waste and disposing of all electronics and electricals via certified solutions providers.
CDP estimates that the average company’s supply chain emissions are five-and-a-half times higher than those generated by operations. This makes the supply chain a crucial focus in the net-zero transition. Bank of America is already disclosing supplier environmental data through CDP’s platform.
“It is critical that we leverage all parts of our business – beyond our direct operations – in order to accelerate the transition to a net-zero global economy,” Bank of America Vice Chairman Anne Finucane said. “We recognize that this will be no easy task, but we believe our commitment will help spur the growth of zero-carbon energy and power solutions, sustainable transportation and agriculture, and other sector transformations, while generating more climate-resilient and equitable opportunities for our future.”