SUSTAINABILITY- HOW IS BANK OF AMERICA FARING?

 Sustainability has become a buzz word among the organizations now with most of the organizations trying to set up their sustainable development goals as a part of the organizational goals (Rafi, Why sustainability is crucial for corporate strategy). Sustainability has become increasingly crucial for the organization to remain relevant and competitive in the market. It may require organizations to make changes in they way they operate like digital transformation. Sustainability for organization has 3 pillars which are a) Environmental b) Social c) Governance.

 

Why is it important for Organizations?

Implementing sustainability for the organization have proven to attract top talent, reduce costs and improve the profits for the firm. Firms also face pressure from stakeholders such as investors, regulators, and consumers to implement sustainability in their corporate strategy(Rafi, Why sustainability is crucial for corporate strategy). Sustainability strategy motivate organizations to make long term investment.

However, driving the sustainability has its own share of challenges in a firm, such as lower commitment from the board, sustainability team having no authority to implement initiatives. 

Let us have a look at the Sustainable development initiatives of Bank of America

Bank Of America recognized the importance of preserving the environment for future generation in 2007 and since then the bank have contributed more than $ 200 billion to low carbon and sustainable business activities (Corporate Environmental Sustainability Strategy & Initiatives 2023). Some of the initiatives undertaken by the bank:

• The Bank supports the Paris Climate agreement which was agreed by the world leaders in 2015 by setting goals to achieve net zero greenhouse gas emissions in their financing and supply chain operations before 2050. Environment business initiative team of the bank has set a target of raising $1 trillion by 2030 to progress to a low carbon economy.

• The bank provides financial aid as well as intellectual capital to businesses who develop solutions to climate change and other environmental challenges.

• 100% of electricity used by bank is generated through renewable sources.

To achieve the goal of net zero economy by 2050, it is essential for the bank to partner with external parties (SDGs partnerships: Advancing Sustainable Development Goals 2023). Below mentioned are few of the partnerships of Bank of America to drive innovation and Sustainable development goals.

 

Ø  Terra Cycle

The amount of plastic drinking bottles being disposed in the nature are increasing year on year. Yet there is no progress in the amount of plastic being recycled. Terra cycle works on ensuring that more kinds of products are recyclable and then devising innovative ways to turn the recycled waste into useful products. Terra cycle is trying to achieve the sustainable development goal 12 which is ensure sustainable consumption and Production patterns.

Ø  Proterra

This group focusses on achieving public transportation eco friendly by designing and manufacturing battery systems and electric drivetrains for commercial vehicles, charging infrastructure solutions for commercial fleets. Using a bus which runs on fossil fuels like diesel can emit tons of greenhouse gases into air. Switching to eco-friendly modes such as electric can reduce CO2 emissions by 20%.

ESG- RISK RATING & RANKINGS

It stands for Environmental, Social and Governance. ESG is a tool which helps investors to evaluate company’s commitment towards environmental, social and governance issues (Company ESG risk rating - sustainalytics 2023). Let us see the ESG Risk rating and Ranking of Bank of America:

ESG Risk Rating (Standard)              ESG Risk Rating(BOA)

0-10	Negligible
10-20	Low
20-30	Medium
30-40	High
40+	Severe

20-30	Medium

 

 

 

 

Above measure indicates the extent to which the company is exposed to different material ESG issues. From the above table, we can understand that Bank of America's exposure is Medium

ESG RANKING

Industry Group	Bank of America
(1st= lowest risk)	572 out of 992

REFERENCES

Ø  NA (2023) Company ESG risk rating - sustainalytics, sustainalytics.com. Available at: https://www.sustainalytics.com/esg-rating/bank-of-america-corp/1007897295.

 

Ø  NA (2023) Corporate Environmental Sustainability Strategy & Initiatives, Bank of America. Available at: https://about.bankofamerica.com/en/making-an-impact/environmental-sustainability.

 

Ø  NA (2023) SDGs partnerships: Advancing Sustainable Development Goals, Bank of America. Available at: https://about.bankofamerica.com/en/making-an-impact/sdg-spotlights.

 

Ø  Rafi, T. (no date) Why sustainability is crucial for corporate strategy, World Economic Forum. Available at: https://www.weforum.org/agenda/2022/06/why-sustainability-is-crucial-for-corporate-strategy/#:~:text=Sustainability%20reduces%20costs%20and%20can,and%20a%2022%25%20greater%20productivity.