Bank of America limits coal funding

OREANDA-NEWS. The coal mining sector was hit with another blow yesterday when one of the largest global banks, Bank of America, committed to curb lending to global coal mining companies.

Bank of America has been reducing its credit exposure to coal extraction companies over several years but said it will apply the policy going forward, according to an updated coal policy discussed at the company's annual shareholder meeting yesterday. The policy was released on the company's website late last week.

"This commitment applies globally, to companies focused on coal extraction and to divisions of diversified mining companies that are focused on coal," the policy says.

The company said the policy fits into its corporate social responsibility strategy to conduct business while limiting impact to the environment and surrounding communities. Its policy still permits funding for advanced technologies such as fossil fuel plants with carbon, capture and storage technology.

The policy adds to a global trend to limit the financing of carbon-intensive sectors because of concerns from the investment community about perceived risks.

UK bank HSBC released a report last month stating that investments in fossil fuels could become nonviable as public campaigns, new technology and the falling cost of renewable energy risk making their extraction and use untenable on legal and economic grounds.

The European Investment Bank, which serves as the bank of 28 European Union member states, committed to invest a quarter of its lending portfolio in low-carbon and sustainable projects.

The institution lent €19.1bn (\$21.5bn) in 2014 to projects including sustainable transportation projects, renewable energy and energy efficiency, according to a 5 May publication entitled Finance for Climate Action.

Pending accords — such as a universal climate agreement for post-2020 that might come out of the UN climate summit to be held in Paris in December — is likely to further increase pressure on fossil fuel assets.