Bank of America Decides Not to Climb Every Mountain

Financial firms: Beware the green backlash.

Bowing to pressure from environmentalists, Bank of America announced Dec. 3 it will phase out financing for companies that get coal by mountaintop mining (PDF link). According to The New York Times Green Inc. blog, executives at the Charlotte, N.C.-based bank, one of the country’s largest financial institutions, were “persuaded … to take a measured stand” against this particularly pernicious form of mining by the Natural Resources Defense Council, an environmental group.

Prompted by this action, fellow mega-bank Citibank may also make a hasty descent from loans for similar mountaintop mining ventures, according to a report posted on Reuters Environment blog Saturday. The Reuters blog pointed out that both Citi and Bank of America have been targeted by the Rainforest Action Network for their funding of “dirty coal” mining.

The NY Times blog quoted Bank of America’s announcement about its decision, which said: “While we acknowledge that surface mining is economically efficient and creates jobs, it can be conducted in a way that minimizes environmental impacts in certain geographies.” The blog goes on to cite a Toronto Star story from February that describes how mountaintop mining is conducted by blowing up everything around the coal rather than digging to it, dumping tons of trees, soil and rock into valleys and wrecking havoc on the surrounding areas.

Companies like Bank of America are increasingly playing the “green” card in their dealings with consumers and employees alike. Last March, Bank of America announced a 10-year, $20 billion “environmental initiative” aimed at supporting “the growth of environmentally sustainable business activity to address global climate change.” In addition to making a commitment to lend and invest in businesses with a pro-environment bent, the bank developed eco-friendly card programs and a “green mortgage” offering, offered incentives for employees to buy hybrid vehicles, and executed a plan to reduce the company’s use of paper by more than 40 percent.

There are risks for financial institutions going green. A bank or brokerage can’t court good press by building a couple of LEED-certified offices and slapping the eco- prefix on a couple of its consumer products without expecting environmental groups to also hold their feet in rainforest-burning fires if they transgress in other areas.

Having already lost a lot of credibility and respect with consumers in the past year, financial service firms should be prepared to tow the green line if they want to save face with an increasingly environmentally aware public.