On Thursday, Bank of America Corporation announced that it has issued its second green bond for $600 million in aggregate principal amount, as part of its ongoing commitment to promoting a low-carbon economy by advancing renewable energy and promoting energy efficiency.
The bond is intended for projects under the bank’s $70 billion, multi-year environmental business commitment. B of A launched a 10-year, $50 billion environmental business initiative in 2013 to advance low-carbon economic solutions through lending, investing and facilitating capital, providing advice and developing solutions for global clients. The $50 billion commitment builds upon the bank’s initial $20 billion, multi-year commitment announced in 2007 and achieved four years ahead of schedule.
“We believe green bonds will play an important role in closing the financing gap for renewable energy, energy efficiency and other lower-carbon projects,” said COO Thomas Montag. “The market for green bonds is expanding rapidly and issuing our own green bonds is one way we are helping to meet that growing demand.”
Bank of America has been a leader in the development of the increasingly popular green bond market. In 2013, the B of A issued the first-ever benchmark-sized corporate green bond – a $500 million offering – and co-authored the original version of the Green Bonds Principles (GBP), a voluntary set of guidelines to promote integrity in the development of the green bond market. Building on those actions, last year Bank of America Merrill Lynch was the number one underwriter of green bonds, according to Bloomberg New Energy Finance.
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Renewable energy projects include financing of, or investments in, equipment and systems, which facilitate the use of energy from renewable sources, such as solar, wind and geothermal energy. Energy efficiency projects help reduce energy consumption per unit of output and include projects such as lighting retrofits, co-generation and building insulation, in residential, commercial and public properties.
Previous Bank of America green bond proceeds were used to finance projects such as the retrofitting of streetlights from traditional, high-pressure sodium to LED technology in Los Angeles, CA, and the installation of commercial photovoltaic systems that generate clean, renewable solar power throughout the U.S.
B of A certainly isn’t acting alone. In March, Morgan Stanley released a study saying that sustainable investments are actually performing better than traditional investments. And a slew of banks have recently announced sustainable investment programs, including Citigroup****, which committed $100 billion to finance climate-change mitigation activities, and Deutsche Bank and Barclays, which both committed €1 billion to green bonds.