Bank of America's policy change not only undermines global efforts to combat climate change but also sends a damaging message to its clients, suggesting a tacit endorsement of new investments in fossil fuel assets.
Welcome to the Climate Nexus finance newsletter – a regular update that looks at the big stories and players at the intersection of climate change, finance, regulation, and energy, with tips for the week ahead.
Enjoying the newsletter and think your colleagues would too? Sign up here!
BoA says sike
Bank of America recently modified its Environmental and Social Risk Policy Framework, easing previously established restrictions on financing projects involving coal, Arctic oil, and gas. This move represents a shift from the bank's stance over two years ago, which explicitly excluded direct financing for Arctic oil and gas projects, as well as new or expanded coal-fired power plants and thermal coal mines, by categorizing such projects under "business restrictions." The updated policy introduces a process of "enhanced due diligence" and senior-level review for these projects, now labeled as "business escalations." Critics, like Lucie Pinson from Reclaim Finance, argue that Bank of America's policy change not only undermines global efforts to combat climate change but also sends a damaging message to its clients, suggesting a tacit endorsement of new investments in fossil fuel assets.
Despite being the last among the six largest US banks to commit against financing Arctic drilling and coal projects, Bank of America's policy adjustment places it at odds with other major banks that maintain restrictions on funding such projects. Bank of America is currently the world’s fourth-largest funder of fossil fuels.
The ‘mastermind’ behind Utah’s oil boom
The Huffington Post recently did an explosive feature on Jim Finley. Who, you ask? You’re not the only one. He is a Texas billionaire oilman whose expansion into Uinta’s “waxy” crude to Gulf Coast refineries could increase annual US carbon emissions by 1%, reports Christopher D’Angelo. A major GOP donor, Finley has moved aggressively behind the scenes to influence legislation that enables oil and gas exploitation at the expense of local environmental concerns. And Finley’s companies have hugely benefited from taxpayer handouts; A BailoutWatch analysis found that his companies got more than $140 million in COVID-19 relief funds, the largest of any oil and gas company.
Exxon's court crusade continues, dems defend ESG
Even after ESG investors Arjuna Capital and FollowThis rescinded their climate-related shareholder proposal at ExxonMobil, the oil giant is proceeding with litigation to remove the proposal from its proxy ballot. Exxon alleges that “there are still important issues for the court to resolve,” but the court responsible for the case ordered Exxon to explain the outstanding claims, considering the withdrawn proposal. The lawsuit could be thrown out if Exxon fails to make a case, making the notoriously industry-friendly Texas court an unlikely accomplice to the sustainable investing movement.
Meanwhile on Capitol Hill, more than 60 Democrats called on the House and Senate appropriations committees to drop anti-ESG amendments in final annual spending bills. The letter, spearheaded by Sen. Sheldon Whitehouse and Reps. Sean Casten and Juan Vargas, calls out five problematic riders that seek to limit access to climate-related disclosures, block retirement plans from using ESG data, and prohibit the promotion of ESG investments. The legislators argue the anti-ESG riders are “contrary to what the American public wants” and are “antithetical to the free-market system.”
Private Eyes Wide Shut
Carbon Tracker has released a new report, “Private Eyes Wide Shut,” highlighting the transition risks that private equity investors face due to continued investments in upstream oil and gas. The report also contains a case study of 10 private equity-backed companies that are active in the UK and Norway’s North Sea territories, warning that firms such as The Carlyle Group, EIG Partners, and CVC Capital Partners risk losing more than 60% of their aggregate cash flow between 2024 and 2030. Click here to sign up for a webinar on Friday, February 9th at 2:30 UK time (9:30am ET) to learn more about the report.
Sue(ie)! here piggy bank!
The recent lawsuits led by Exxon against its shareholders and by the U.S. Chamber of Commerce and Farm Bureau against California's climate risk and emissions disclosure rules underscore the peril of ignoring climate change as a material financial risk. High-profile leaders from ING Bank, JP Morgan, and Amazon have publicly recognized the financial impact of climate change, advocating for transparency and disclosure to safeguard profits. This push for openness aligns with the interests of most investors and businesses, contrary to the narrow interests behind the lawsuits. Legally, states are empowered to mandate risk and emissions transparency to protect the public and investors from misinformation, with the SEC enforcing fair, orderly, and efficient markets. Despite attempts to challenge these regulations through loud objections and seeking sympathetic judges, experts say these tactics will unlikely stop the overall move towards increased corporate transparency and accountability. These litigating companies may ultimately find that straightforward disclosure is cheaper than letting high-priced corporate lawyers drain their piggy banks.