Bank of America pledges $125 billion for biofuels and environmental business
Bank of America (BoA) has pledged to increase the company’s current environmental business initiative from $50 billion to $125 billion (appr. €45 billion to €112.5 billion) in low-carbon business by 2025 through lending, investing, capital raising, advisory services, and developing financing solutions for clients around the world.
BoA’s initiative and commitment focus on energy efficiency, renewable energy, and transportation, in addition to addressing other important areas like water conservation, land use and waste.
The expanded second commitment builds on BoA’s initial environmental business initiative established in 2007 and fulfilled in 2013, four years ahead of schedule.
‘We are putting our financial capital, our intellectual capital, and the strength of our partnerships to work to help create a better future for all of us,’ says Brian Moynihan, CEO of BoA.
BoA has provided more than $39 billion in financing for low-carbon activities since 2007, including $12 billion in 2014 alone, of which 40% was given to renewable energies – advanced biofuels, solar, wind, hydro, geothermal, or mixed portfolios – and 33% went to financing energy efficiency.
In the past 12 months, BoA has deployed several capital markets solutions designed to accelerate the funding of low-carbon projects, focusing in particular on developing the green bond market and building out its new catalytic finance initiative.
BoA has played a role in the development of the rapidly expanding green bond market, issuing the first benchmark-sized corporate green bond in 2013 – a $500 million offering – followed by a second green bond for $600 million in the spring of 2015.
According to Bloomberg New Energy Finance, BoA was the number one underwriter of green bond issuances in 2014.
BoA is also committed to attracting a wider array of capital to clean energy investments while delivering low-risk, solid yield opportunities for investors though the bank’s catalytic finance initiative.
Examples of initial projects under the initiative include:
- Global Alliance for Clean Cookstoves: In November 2014, BoA announced a partnership with the Global Alliance for Clean Cookstoves and other commercial and development finance institutions to raise $100 million to help provide clean cooking solutions to millions of households in the developing world. Advancing clean cookstove technology helps improve the health of women and children, protects the environment by reducing carbon emissions, and spurs economic growth.
- Energía Eólica SA (EESA): Bank of America was a joint bookrunner for the first green bond out of Latin America, an offering of $204 million in senior secured green notes by EESA, a ContourGlobal subsidiary. Proceeds from the green project bond directly support EESA’s two separate wind farms in Talara and Cupisnique, Peru that became operational in September 2014 with an installed capacity of 114.04 MW. This green offering is expected to be the first of a new asset class that will help finance environmentally beneficial infrastructure in Latin America. It was recently named “Green Bond of the Year” by Environmental Finance magazine.