BofA plan has a payoff for the ecosystem
In what could be the largest environmentally friendly corporate project in history, Bank of America Corp. will unveil a $20-billion initiative today to help fertilize green business practices.
The aim of the plan is shrink energy use and deploy new technologies to reduce emission of the greenhouse gases that contribute to global warming.
Over the next decade, Bank of America will earmark funds to lend to companies interested in creating green services or constructing energy-frugal office buildings. The nation’s largest retail bank also intends to offer consumer programs that direct money to environmental organizations, and it will offer lower mortgage rates on energy-efficient homes.
“This is intended to be good business as well as the right thing to do,” said Anne Finucane, chief marketing officer for Charlotte, N.C.-based bank.
Businesses are beginning to understand that they can make money in the green arena, observers say. However, skeptics add the investments must be monitored to ensure they are truly helping the environment.
“This represents a dramatic approach to the environment that is not only philanthropic but is in the spirit of making money,” said Daniel Esty, a Yale University environmental law professor who co-authored the book “Green is Gold: How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build Competitive Advantage.”
Esty says he’s been pleased to see more companies announce environmental initiatives in the last six months as they try to tap into a lucrative market.
But some companies’ commitments are more noise than substance, Esty said. Virgin Group’s chairman Richard Branson, for example, last year pledged to commit about $3 billion over the next decade to combat global warming. But, Esty said, Branson only earmarked profits from his air and rail businesses, which don’t always make money.
Bank of America’s pledge will be impressive, Esty said, if in 10 years it can point to environmentally responsible buildings or products it has helped finance.
The program reaches across the company, said James Mahoney, Bank of America public policy director. The largest piece commits $18 billion to corporate efforts -- financing green buildings and energy-efficient technologies, assisting companies in trading carbon-emissions credits and providing financial and advisory services to businesses developing environmentally friendly products.
In addition to the cut-rate mortgages, the bank will offer consumers a credit card that accumulates points for donations to conservation organizations, and an investment platform focusing on reforestation and wildlife management. The bank will also expand existing programs that offset the impact of its own operations, including the completion of the Bank of America Tower in Manhattan, designed to be one of the world’s most energy-efficient skyscrapers.
Bank of America is not the only financial institution that has committed funds to environmental projects, but its program is unusually specific, said Andrea Moffat, director of corporate outreach at Ceres, a coalition that helps companies address climate change and other ecological issues.
For example, more than 80% of the world’s commercial lenders, including Bank of America, have signed the Equator Principles, vowing to assess the environmental effects of a project before they lend to it. Goldman Sachs Group Inc., JP Morgan and Citigroup Inc. also have made commitments to green policies and investments, she said.
But Bank of America is in a new green league, some say. Only Wal-Mart Stores Inc., which announced a sweeping green initiative in 2005, and General Electric, which unveiled plans the same year to invest in non-polluting technologies, come close to Bank of America in their environmental commitment, said Glenn Prickett, a senior vice president at Conservation International, Prickett’s group plans to channel some funds from the bank’s initiative into land-conservation programs.
The plan could mean big business for Bank of America as states, including California, enact regulations requiring businesses to become more energy efficient. Observers say the company is smart to get in on the ground floor.
“The green economy is a business space of unmeasurable proportions,” said Joel Makower, executive editor of greenbiz.com, a news service covering environmental issues. “Bank of America is acknowledging that they want their share.”