From the outside looking in, sustainable finance in North America seems to act much like a see-saw. Last year, news about the wave of anti-environmental, social and governance legislation coming from Republican states was immediately followed by $500 billion of financial incentives for clean energy and healthcare under the Inflation Reduction Act (IRA). This was then followed by concerns over gridlock when the Republicans took control of the House.
Meanwhile in Canada, wildfires and oil leaks threaten the livelihoods of indigenous people and are polarizing the debate around hydrocarbon exports just as European countries turn to the country for non-Russian energy supply.
In this difficult context, Bank of America has done well to stay the course, deploying more sustainable capital than most. Since the 2021 announcement of its goal to deploy $1.5 trillion in sustainable finance capital by 2030, BofA has mobilized a cumulative total of $410 billion in sustainable finance, $160 billion of this in 2022.
A lot of this capital has been channelled into low-carbon technologies. The bank is providing project financing through a construction loan to Clēnera for the 105-megawatt Apex Solar project in Montana. BofA was also coordinating lead arranger, joint tax equity investor and sole hedge contributor for the Gemini solar and storage project comprising a 966MW utility-scale solar and a 380MW storage asset in Clark County, Nevada.
“We talk at length about the trillions of dollars a year needed to fund the transition and we don’t have any time to waste,” says Karen Fang, global head of sustainable finance at Bank of America, pointing to the sheer scale of financing that the firm is able to achieve.
The Gemini project funded $1.9 billion in debt and tax equity financing and is expected to generate enough clean energy to power more than 400,000 homes during peak periods and displace 1.5 million metric tonnes of CO₂ annually once it is operational later this year.
Looking at its own carbon footprint, the bank announced a solar energy deal with Constellation Energy to power its operations with renewable energy. This will save more than 95,000 tonnes of carbon.
“Doing good and doing well is widely accepted as a goal in the US right now, it’s a stakeholder capitalism-driven approach,” adds Fang.
Beyond investments in utility-scale wind and solar – which Fang calls the “no excuse” category – BofA has also invested heavily in distributed generation. With the IRA coming into force, battery storage, carbon capture, green hydrogen and sustainable aviation fuels are a focus for the bank in addition to wind and solar.
“We’re spending more energy on innovative emerging technologies,” she adds.
I do credit our success to the organizational design of our firm
Karen Fang
On the social side, the group issued its third equality progress sustainability bond for $2 billion in November 2022. Around 50% of the proceeds of the bond will go towards one or more eligible equality progress social assets, which aim to advance racial and gender equality, economic opportunity and environmental sustainability.
“The bond demonstrates how the financial community can find ways to create meaningful impact in the lives of individuals and further socioeconomic empowerment for underserved populations,” says Fang.
Over the past year, BofA’s philanthropic investments driving economic mobility in local communities neared $360 million. BofA also provided a $230,000 grant to support the American Forest Foundation’s Family Forest Carbon programme.
“I do credit our success to the organizational design of our firm,” says Fang, who sees the sustainable finance group as the quarterback of the company. For BofA, that sounds about right.
