Issue 28: 2014

Corporate Social Responsibility

An Evolving Approach

Bank of America rethinks corporate social responsibility for sustainability.

John Hersey/Theispot.com

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This past September, at the United Nations Climate Summit in New York City, Bank of America CEO Brian Moynihan announced the bank’s support for the Catalytic Finance Initiative, which is designed to stimulate at least $10 billion of new investments into high-impact, clean energy projects around the world.

This announcement represented another step toward the bank’s 10-year environmental business goal, announced in 2012, to commit $50 billion to advance lower-carbon economic solutions through lending, equipment financing and many other activities. Actually, the $50 billion commitment followed an initial $20 billion commitment announced in 2007, which was achieved four years ahead of schedule. Since 2007, Bank of America has dedicated $31.7 billion to low-carbon and other environmental business activities.

“That commitment is one part of our broader approach to the environment, and it’s emblematic of our evolving approach to corporate social responsibility, or CSR,” says Andrew Plepler, corporate social responsibility executive at Bank of America.

“The company has simplified, focused and improved our approach to CSR,” he says. While grant making is still critical, CSR has become a part of everything Bank of America does, he says. “All of our activities — from the way we run our businesses to our environmental initiatives, our social impact programs and our corporate governance practices — are now aligned. Our focus is on how we connect our capabilities to help our clients pursue their goals, how we connect companies to the capital necessary to fuel economic growth, and how we connect communities to the tools they need to thrive.”

In recent years a growing concern for ESG — that is, the environment, social issues and corporate governance — has become an increasingly important factor when looking at and investing in companies. And, according to Plepler, Bank of America’s approach to CSR fits within an ESG framework.

The environment

Energy financing: “At Bank of America, we agree that climate change is happening, that society needs to transition from high-carbon to low-carbon energy, and that the bank has a responsibility to accelerate this transition,” says Plepler. Core to the firm’s approach, as mentioned earlier, is one of the largest business commitments to address climate change in the industry. Over the past three years, the bank has quadrupled its renewable energy business. In 2013 alone, its financing of low-carbon projects resulted in the avoidance of more than 1.5 million tons of carbon emissions.

The bank is not only providing financial capital to accelerate the transition to low-carbon energy; it is also providing intellectual capital by promoting financial innovations meant to increase low-carbon investments. One such financial innovation is green bonds. Says Plepler: “Our work in this area culminated in our issuance in November 2013 of the first-ever corporate green bond — raising $500 million to finance energy efficiency and renewable energy projects.”

Environmental philanthropy and nonprofit partnerships: In 2013, the bank committed more than $14.5 million in environmental philanthropy — funding programs and partnerships that provide sustainable solutions to communities around the world, many of which are facing significant challenges.

The bank’s own operations: “Our focus on creating a more sustainable society extends to managing the reduction of our own operations’ impact on the environment,” says Plepler. For 2015, goals include reducing the bank’s global water consumption by 20%, reducing greenhouse gas emissions by 30%, and bettering its corporate workplaces by achieving a 20% Leadership in Energy and Environmental Design (LEED®) certification, the industry standard for green building, in 20% of our portfolio.

While grant making is still critical, CSR has become a part of everything Bank of America does.

Employee programs: Bank of America also helps employees across the globe act as good environmental stewards at work and at home. Some of the many programs include the My Environment education program, the Waste-Less Lunch program in partnership with the United Nations, such volunteer activities as International Coastal Clean Up Day, and the bank’s low-carbon vehicle reimbursement program.

Vendors: The bank employs a range of policies and initiatives to manage the environmental effects of its supply base. Since 2009, it has invited vendors to respond to the CDP Supply Chain Survey, a support tool that helps disclose carbon emissions. The bank has also integrated environmental sustainability criteria into its supplier sourcing processes.

Social impact

“We work to make the financial lives of our customers, clients, shareholders and communities better by connecting individuals, families and businesses to the solutions they need to help meet their goals and help their communities flourish,” says Plepler. Ultimately, the aim is to bring the breadth of the bank’s capabilities — including access to capital, strategic expertise, specialized products and a global workforce — to help public, private and nonprofit clients amplify their impact on the social, environmental and economic challenges they are addressing.

Economic development activities: Bank of America has a 10-year, $1.5 trillion community development lending and investing goal that began in 2009. As part of it, the bank provides affordable housing, small business and consumer lending, and invests in economic development designed to revitalize neighborhoods by creating jobs and constructing or renovating land, infrastructure and buildings, all of which drive and enrich local economies and communities.

Community development financial institutions (CDFIs): The bank has invested $1.2 billion in more than 240 CDFIs in all 50 states, Puerto Rico and the District of Columbia. These nonprofit local lenders provide affordable loans and technical support to low- and moderate-income communities while promoting affordable housing, small business growth, economic development and job creation. The bank is focused on the unique challenges faced by women small business owners, and recently launched partnerships with the Tory Burch Foundation and Calvert Foundation to help provide entrepreneurial women with access to affordable loans, mentoring support and networking opportunities.

Governance

Bank of America’s corporate governance practices and management policies provide accountability and transparency across all of its businesses and activities. “This year,” says Plepler, “we established a committee that focuses on global corporate social responsibility that reports directly to our CEO.” The committee provides a forum for dialogue on emerging CSR issues, including concerns raised by advocates, regulators and influencers. Made up of senior leaders from business and support groups across the company, the committee is chaired by Anne Finucane, global chief strategy and marketing officer at Bank of America, who serves as its liaison to the board. “This structure will ensure that CSR continues to be integrated into our core business decisions,” says Plepler. “And that CSR-related issues are considered and debated at the highest levels within our company.”

The Global Advisory Council (GAC) was also established recently. The goal of this group, which is made up of leaders from outside the bank, is to share with Bank of America management its expertise and insights on global engagement, help strengthen our worldwide relationships, and identify trends and emerging opportunities in local markets.

The committee and the Global Advisory Council join the National Community Advisory Council (NCAC), which was formed in 2005 with the goal of advising the bank on community development lending and investing. While the council continues to focus on community development and consumer policy issues, the concentration has evolved to include broader discussion about critical environmental, governance and social issues for Bank of America and its stakeholders.

Better positioned to meet the needs of those we serve

CSR has an expanding role in Bank of America today. “Whether we’re talking about providing access to capital for women entrepreneurs, mentoring emerging leaders in developing countries, eliminating overdraft fees for debit cards at point of sale or partnering with (RED)™ to help end mother-to-child HIV/AIDS transmission, the bottom line is that CSR has never been more important to how we govern ourselves as a company,” says Plepler. The evolution of Bank of America’s CSR program has had a tangible impact on the redefinition of our purpose: making people’s financial lives better while also addressing a wide range of urgent and critical social concerns.

IMPORTANT INFORMATION

Investing involves risk. There is always the potential of losing money when you invest in securities.

Some of the featured participants are not employees of U.S. Trust. The opinions and conclusions expressed are not necessarily those of U.S. Trust or its personnel. Any of their discussions concerning investments should not be considered a solicitation or recommendation by U.S. Trust and may not be profitable.

Projections made may not come to pass due to market conditions and fluctuations.

Always consult with your independent attorney, tax advisor, investment manager and insurance agent for final recommendations and before changing or implementing any financial, tax or estate planning strategy.

OTHER IMPORTANT INFORMATION

Equities
Equity securities are subject to stock market fluctuations that occur in response to economic and business developments.

Fixed Income
Investing in fixed-income securities may involve certain risks, including the credit quality of individual issuers, possible prepayments, market or economic developments, and yields and share price fluctuations due to changes in interest rates. When interest rates go up, bond prices generally drop, and vice versa.

Commodities
Energy and natural resources stocks have been volatile. They may be affected by rising interest rates and inflation, and can also be affected by factors such as natural events (for example, earthquakes or fires) and international politics.

This past September, at the United Nations Climate Summit in New York City, Bank of America CEO Brian Moynihan announced the bank’s support for the Catalytic Finance Initiative, which is designed to stimulate at least $10 billion of new investments into high-impact, clean energy projects around the world.

This announcement represented another step toward the bank’s 10-year environmental business goal, announced in 2012, to commit $50 billion to advance lower-carbon economic solutions through lending, equipment financing and many other activities. Actually, the $50 billion commitment followed an initial $20 billion commitment announced in 2007, which was achieved four years ahead of schedule. Since 2007, Bank of America has dedicated $31.7 billion to low-carbon and other environmental business activities.

“That commitment is one part of our broader approach to the environment, and it’s emblematic of our evolving approach to corporate social responsibility, or CSR,” says Andrew Plepler, corporate social responsibility executive at Bank of America.

“The company has simplified, focused and improved our approach to CSR,” he says. While grant making is still critical, CSR has become a part of everything Bank of America does, he says. “All of our activities — from the way we run our businesses to our environmental initiatives, our social impact programs and our corporate governance practices — are now aligned. Our focus is on how we connect our capabilities to help our clients pursue their goals, how we connect companies to the capital necessary to fuel economic growth, and how we connect communities to the tools they need to thrive.”

In recent years a growing concern for ESG — that is, the environment, social issues and corporate governance — has become an increasingly important factor when looking at and investing in companies. And, according to Plepler, Bank of America’s approach to CSR fits within an ESG framework.

The environment

Energy financing: “At Bank of America, we agree that climate change is happening, that society needs to transition from high-carbon to low-carbon energy, and that the bank has a responsibility to accelerate this transition,” says Plepler. Core to the firm’s approach, as mentioned earlier, is one of the largest business commitments to address climate change in the industry. Over the past three years, the bank has quadrupled its renewable energy business. In 2013 alone, its financing of low-carbon projects resulted in the avoidance of more than 1.5 million tons of carbon emissions.

The bank is not only providing financial capital to accelerate the transition to low-carbon energy; it is also providing intellectual capital by promoting financial innovations meant to increase low-carbon investments. One such financial innovation is green bonds. Says Plepler: “Our work in this area culminated in our issuance in November 2013 of the first-ever corporate green bond — raising $500 million to finance energy efficiency and renewable energy projects.”

Environmental philanthropy and nonprofit partnerships: In 2013, the bank committed more than $14.5 million in environmental philanthropy — funding programs and partnerships that provide sustainable solutions to communities around the world, many of which are facing significant challenges.

The bank’s own operations: “Our focus on creating a more sustainable society extends to managing the reduction of our own operations’ impact on the environment,” says Plepler. For 2015, goals include reducing the bank’s global water consumption by 20%, reducing greenhouse gas emissions by 30%, and bettering its corporate workplaces by achieving a 20% Leadership in Energy and Environmental Design (LEED®) certification, the industry standard for green building, in 20% of our portfolio.

While grant making is still critical, CSR has become a part of everything Bank of America does.

Employee programs: Bank of America also helps employees across the globe act as good environmental stewards at work and at home. Some of the many programs include the My Environment education program, the Waste-Less Lunch program in partnership with the United Nations, such volunteer activities as International Coastal Clean Up Day, and the bank’s low-carbon vehicle reimbursement program.

Vendors: The bank employs a range of policies and initiatives to manage the environmental effects of its supply base. Since 2009, it has invited vendors to respond to the CDP Supply Chain Survey, a support tool that helps disclose carbon emissions. The bank has also integrated environmental sustainability criteria into its supplier sourcing processes.

Social impact

“We work to make the financial lives of our customers, clients, shareholders and communities better by connecting individuals, families and businesses to the solutions they need to help meet their goals and help their communities flourish,” says Plepler. Ultimately, the aim is to bring the breadth of the bank’s capabilities — including access to capital, strategic expertise, specialized products and a global workforce — to help public, private and nonprofit clients amplify their impact on the social, environmental and economic challenges they are addressing.

Economic development activities: Bank of America has a 10-year, $1.5 trillion community development lending and investing goal that began in 2009. As part of it, the bank provides affordable housing, small business and consumer lending, and invests in economic development designed to revitalize neighborhoods by creating jobs and constructing or renovating land, infrastructure and buildings, all of which drive and enrich local economies and communities.

Community development financial institutions (CDFIs): The bank has invested $1.2 billion in more than 240 CDFIs in all 50 states, Puerto Rico and the District of Columbia. These nonprofit local lenders provide affordable loans and technical support to low- and moderate-income communities while promoting affordable housing, small business growth, economic development and job creation. The bank is focused on the unique challenges faced by women small business owners, and recently launched partnerships with the Tory Burch Foundation and Calvert Foundation to help provide entrepreneurial women with access to affordable loans, mentoring support and networking opportunities.

Governance

Bank of America’s corporate governance practices and management policies provide accountability and transparency across all of its businesses and activities. “This year,” says Plepler, “we established a committee that focuses on global corporate social responsibility that reports directly to our CEO.” The committee provides a forum for dialogue on emerging CSR issues, including concerns raised by advocates, regulators and influencers. Made up of senior leaders from business and support groups across the company, the committee is chaired by Anne Finucane, global chief strategy and marketing officer at Bank of America, who serves as its liaison to the board. “This structure will ensure that CSR continues to be integrated into our core business decisions,” says Plepler. “And that CSR-related issues are considered and debated at the highest levels within our company.”

The Global Advisory Council (GAC) was also established recently. The goal of this group, which is made up of leaders from outside the bank, is to share with Bank of America management its expertise and insights on global engagement, help strengthen our worldwide relationships, and identify trends and emerging opportunities in local markets.

The committee and the Global Advisory Council join the National Community Advisory Council (NCAC), which was formed in 2005 with the goal of advising the bank on community development lending and investing. While the council continues to focus on community development and consumer policy issues, the concentration has evolved to include broader discussion about critical environmental, governance and social issues for Bank of America and its stakeholders.

Better positioned to meet the needs of those we serve

CSR has an expanding role in Bank of America today. “Whether we’re talking about providing access to capital for women entrepreneurs, mentoring emerging leaders in developing countries, eliminating overdraft fees for debit cards at point of sale or partnering with (RED)™ to help end mother-to-child HIV/AIDS transmission, the bottom line is that CSR has never been more important to how we govern ourselves as a company,” says Plepler. The evolution of Bank of America’s CSR program has had a tangible impact on the redefinition of our purpose: making people’s financial lives better while also addressing a wide range of urgent and critical social concerns.

IMPORTANT INFORMATION

Investing involves risk. There is always the potential of losing money when you invest in securities.

Some of the featured participants are not employees of U.S. Trust. The opinions and conclusions expressed are not necessarily those of U.S. Trust or its personnel. Any of their discussions concerning investments should not be considered a solicitation or recommendation by U.S. Trust and may not be profitable.

Projections made may not come to pass due to market conditions and fluctuations.

Always consult with your independent attorney, tax advisor, investment manager and insurance agent for final recommendations and before changing or implementing any financial, tax or estate planning strategy.

OTHER IMPORTANT INFORMATION

Equities
Equity securities are subject to stock market fluctuations that occur in response to economic and business developments.

Fixed Income
Investing in fixed-income securities may involve certain risks, including the credit quality of individual issuers, possible prepayments, market or economic developments, and yields and share price fluctuations due to changes in interest rates. When interest rates go up, bond prices generally drop, and vice versa.

Commodities
Energy and natural resources stocks have been volatile. They may be affected by rising interest rates and inflation, and can also be affected by factors such as natural events (for example, earthquakes or fires) and international politics.