Two years ago, Bank of America won kudos from climate activists for saying it would no longer finance new coal mines, coal-burning power plants or Arctic drilling projects because of the toll they take on the environment.
The bank’s latest environment and social-risk policy reneged on those commitments. The policy, updated in December, says that such projects will instead be subject to “enhanced due diligence.”
Bank of America’s change follows intensifying backlash from Republican lawmakers against corporations that consider environmental and social factors in their operations. Wall Street in particular has come under fire for what some Republicans have called “woke capitalism,” a campaign that has pulled banks into the wider culture wars.
States including Texas and West Virginia have passed financial regulations designed to ward off efforts to deny fossil-fuel companies access to banking services. In New Hampshire, state lawmakers have sought to criminalize the business principle known as E.S.G., shorthand for environmental, social and governance.
These actions have sent a chill through the E.S.G. world. Last year, big investors pulled money out of sustainability-focused funds at a record rate as they shied away from the sector amid conservative criticism. Larry Fink, chief executive of the asset management firm BlackRock and once a prominent proponent of E.S.G., said last June that he had stopped using the term because it had become too politicized.
Bank of America said in a statement that clients or transactions “that carry heightened risks will continue to go through an enhanced due diligence process involving senior level risk review.”