The twin challenges of Covid and accelerating climate change last year gave banks an unprecedented opportunity to prove their commitment to corporate responsibility.
Across the globe, lenders stepped up to the challenge, supporting their employees and communities, boosting commitments to environmental protection and – in the wake of racial justice protests in the US and elsewhere – strengthening efforts to promote diversity and inclusion.
Despite stiff competition, however, Bank of America’s integrated and pioneering approach to environmental, social and governance (ESG) issues earns it Euromoney’s award for world’s best bank for corporate responsibility for a second year in succession.
Shortlisted
- BNP Paribas
- Citi
- Santander
- Societe Generale
Introduced more than a decade ago, chief executive Brian Moynihan’s responsible banking strategy is now embedded in BofA’s corporate culture. As Andrew Plepler, the bank’s global head of ESG, puts it: “There is no daylight here between running the company and ESG.”
BofA’s leadership in this respect was shown last summer, when it went further and faster than peers in its response to the Covid crisis and demands for racial equity.
As well as providing comprehensive support for staff in offices and those working remotely, and pledging $100 million for communities affected by the pandemic across its global network, the bank was also the first in the US to issue a Covid bond, raising $1 billion to finance healthcare institutions.
A month later, it was also one of the first US institutions to go public with a commitment to address racial and ethnic disparities following the murder of George Floyd.
Focused on creating opportunities for people and communities of colour in areas including healthcare, small business support and affordable housing, the programme was sized at $1 billion at launch in June 2020. It has since been increased to $1.25 billion and expanded to include targeted help for Asian-American communities.
More than $350 million of this has already been allocated, with beneficiaries including historically black colleges and universities, Hispanic-serving institutions and community colleges in the US, as well as global minority communities adversely affected by Covid.
Community Development Financial Institutions (CDFIs) were a key component of BofA’s racial equity and Covid support strategies. As well as helping its extensive CDFI network to channel federal government assistance to low and middle-income and minority communities across the US, the bank also committed to take equity stakes in CDFI banks in minority communities.
Another corporate responsibility milestone came in September, when it became the first financial institution to issue an equality progress sustainability bond.
Proceeds of the groundbreaking $2 billion deal – the eighth ESG-themed corporate bond issued by the bank – were pledged for projects advancing racial equality, economic opportunity and environmental sustainability.
As with other aspects of Bank of America’s sustainability agenda, this support has been provided against a backdrop of consultation with community leaders and other stakeholders.
“A big focus for us around ESG is external governance – how do we make sure we’re not just talking to ourselves but also getting an outside-in perspective, particularly around climate and racial equity,” says Plepler.
Around 30 advocates from civil rights, consumer and environmental groups comprise its National Community Advisory Council, which meets twice a year and consults on specific issues more regularly.
Bank of America’s focus on social issues was also evidenced in April with the announcement of its 2030 target for sustainable finance. Unlike many peers, the initiative included $500 billion for socially inclusive development as well as $1 trillion for environmental projects.
We know it’s not going to be perfect every step of the way, but we know we’re moving in the right direction
Karen Fang
This is reflected internally in the bank, where half of the workforce are women and 48% people of colour. Half of senior and mid-level managers are diverse and Bank of America is one of only five S&P 500 companies with six or more women on the board.
On the environmental side, the bank also maintained its strong track record during the awards period, particularly on climate issues.
As well as leading the charge on climate finance, BofA was also a first mover in addressing the impact of its own operations, becoming the first US lender to publish scope 1 and 2 emission details in 2005 and going carbon neutral as early as 2009.
Over the past two years it has taken that further, spearheading work to calculate and reduce financed emissions. In July 2020 the bank joined the Partnership for Carbon Accounting Financials, as a member of its global core team, and in February committed to achieve net zero by 2050.
As well as addressing its own portfolio, Bank of America has emerged as one of the main drivers of attempts to reach an industry consensus on net-zero methodology and broader ESG standards.
In his roles as chair of the World Economic Forum’s International Business Council and the Sustainable Markets Initiative, Moynihan has been key in convening banking sector leaders. Bank of America is also a founder member of the Net-Zero Banking Alliance.
“All the various thought leadership pieces we’re involved in may not lead to transactions today, but we are there because we believe that we can influence and pull people forward,” says Karen Fang, global head of sustainable finance at Bank of America.
“We know it’s not going to be perfect every step of the way, but we know we’re moving in the right direction.”
