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Bank of America joins other big U.S. banks in saying it won’t finance oil and gas exploration in the Arctic.
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Holdout Bank of America has officially joined other U.S. banking majors in refusing to finance oil and gas exploration in the pristine section of Alaska that President Trump last month opened to drilling for the first time ever.
Larry Di Rita, head of Bank of America’s BAC, +2.59% public policy and strategy in Washington, told Bloomberg in an interview that the company had not provided finance for natural resource concerns in the protected region historically but that public perception prompted executives to “codify our existing practice” against financing drilling in Alaska’s Arctic National Wildlife Refuge.
The Sierra Club last month positioned Bank of America as “the only major U.S. bank not to rule out financing for the destruction of the Arctic refuge” after its five biggest competitors updated policies. Pressure had also mounted from other environmental groups.
In April, Morgan StanleyMS announced its revised policy, joining Wells FargoWFC, Goldman SachsGS, JPMorgan ChaseJPM and CitigroupC in rebuffing activity in the wildlife preserve, although they continue to lend to fossil-fuel interests elsewhere. Climate groups had calculated roughly $700 billion in fossil-fuel financing by the world’s largest investment banks since the signing of the Paris agreement in 2015 through the end of 2018. Banks have tried to offset this portion of their business by underwriting green bonds and making their own corporate pledges over the past year to cut pollution; Bank of America has a goal of achieving net-zero emissions by 2050.
The Trump administration last month called for oil and gas firms to select where they might want to drill for the first time in the U.S.’s largest pristine tract of wilderness before President-elect Joe Biden assumes the White House in January.
The tracts will be bid on during an upcoming lease sale on the Arctic refuge’s nearly 1.6 million acre coastal plain, which is about the size of Delaware. Leases may prove difficult to claw back once finalized, though court challenges are expected.
The move will open up public lands to drilling, as well as logging, mining and grazing. Biden campaigned on protecting public lands from these activities. The Trump administration has stressed that U.S. energy independence should be a primary goal to hold down costs for businesses and consumers and to allow the U.S. an upper hand on the global stage.
The Trump administration’s Office of the Comptroller of Currency has separately proposed a rule that some see taking aim at banks’ attempts to exclude certain fossil-fuel funding.
The proposal, rolled out last month, says decisions by banks should be based on individual client risks rather than a categorical exclusion and was promoted as a means to ensure fair access to financing.
But critics, including the Sierra Club, see the proposal as an attempt to force banks to provide financing for fossil fuel production, particularly in the Arctic. Oil-state lawmakers were largely in favor of the Trump announcement, but the proposal did raise some free-market concerns including from the group Campaign for Liberty.
“Now that every major American bank has stated unequivocally that they will not finance this destructive activity, it should be clearer than ever that any oil company considering participating in Trump’s ill-advised lease sale should stay away,” the Sierra Club said in a statement.
Major oil concerns have not run significant tests in the area, which is lacking infrastructure. The area is estimated to contain as much as 11.8 billion barrels of recoverable crude CL00, -2.00%.
Bank of America shares are down some 18% in the year to date, although have trimmed a deeper skid with an 11% gain in the past three months. The Financial Select Sector SPDR ETF XLF, +1.99% is down 5.6% in the year to date.
