As The Guardian reports The Bank of America considers Coal investments to be increasingly risky.
Bank will continue to cut its exposure to troubled coal sector and increase lending to renewables, but remains one of world’s biggest backers of Coal mining companies pose an increasingly risky investment, according to theBank of America, which has said it will continue to reduce its financing of the sector.f coal mining.
“The dynamics around coal are shifting,” said the bank’s new coal policy published on Wednesday, which cited pollution regulations, changes in economic conditions, increased competition from shale gas and renewable power.
Analysts from the thinktank Carbon Tracker warned recently that the coal sector in the US had entered a “structural decline”.
“Over the last several years, the coal mining sector has experienced a challenging environment in which increasing risks and shifting dynamics have reshaped its landscape,” a Bank of America spokeswoman told the Guardian.
She said the bank had been downsizing its investments in coal mining for several years in order to reduce its exposure to the troubled sector, but could not say how much it had reduced its lending by previously or offer future targets for its retreat from the sector.
The new policy said: “Going forward, Bank of America will continue to reduce our credit exposure to coal extraction companies.” It also committed to increasing lending to renewable energy, energy efficiency and carbon capture and storage. The spokeswoman said the bank’s renewable energy portfolio was currently more than three times as large as its coal extraction portfolio.
Despite reducing its investments in the sector, the bank remains among the world’s biggest backers of coal mining, according to the Coal Finance Report Card, released by a coalition of green groups this week. In 2014 the Bank of America supplied coal mining companies with more than $1.3bn (£0.8bn) in finance.
Activists from Rainforest Action Network (RAN) hailed the announcement as a further blow for a flagging industry, saying it was first global bank to commit to scaling down its coal mining exposure.
RAN has lobbied the bank to stop underwriting coal extraction since 2011. The group’s climate and energy programme director Amanda Starbuck said the new policy indicated the bank was “turning its back on the coal mining industry”.
“Today’s announcement from Bank of America truly represents a sea change: it acknowledges the responsibility that the financial sector bears for supporting and profiting from the fossil fuel industry and the climate chaos it has caused,” she said. “RAN will rigorously monitor the implementation of this policy and hold Bank of America to its word.”
RAN has also lobbied for the bank to join 11 other international banks in committing not to finance Indian company Adani’s so-called ‘carbon bomb’ coal projects in Australia’s Galilee Basin and at Abbot Point. On Wednesday, the chairman of Standard Chartered said the bank would review its involvement in the Australian coal mines.
The Bank of America did not respond when asked whether the new policy would rule out lending money to these developments.
The bank released its policy at its annual shareholder meeting in Charlotte, North Carolina – part of the Appalachian region where companies practice mountaintop removal mining (MTR) mining.
The bank singled out MTR as a practice that had received “enhanced regulatory oversight and criticism”. The new policy commits the bank to “continue to reduce our exposure” to MTR but does not set targets. Barclays Bank, once the world’s largest financier of MTR, ended its involvement with the practice in April.
The Bank of America’s clients also include Indian state-owned giant Coal India, which has been linked to human rights abuses and child labour. The new policy said the bank would consider “the impacts of client operations on local communities, we support fundamental principles of human rights, and expect our clients to do the same”.
