Bank of America CEO says ‘we are capitalists’ as anti-ESG critics gain momentum

NEW YORK, March 7 (Reuters) – Brian Moynihan, Chief Executive Officer of Bank of America Corp. (BAC.N), had a clear message to shareholders on Tuesday: “We are capitalists.”

The proclamation from the head of the second-largest U.S. lender may seem obvious, but comes at a time when Wall Street titans are facing more scrutiny for embracing environmental, social and governance (ESG) considerations.

“I was sometimes surprised to be asked — including in Congressional hearings — ‘Are you a capitalist?’” Moynihan wrote in the bank’s annual report, published Tuesday. “You may also find the question unusual. Of course I answered ‘Yes’.”

Some US Republican politicians have attacked banks and asset managers for their treatment of energy companies and their focus on issues such as climate change and workforce diversity, claiming they are putting ESG considerations above shareholder and depositor returns.

Investors have also pulled away from ESG funds as high oil prices have hurt returns, but top asset managers have largely held their own against many efforts with a social or environmental focus.

In January, Moynihan told Reuters that “capitalism is the system that will produce the best outcome, which is why we believe in profit and purpose,” he said, pointing to the bank’s record earnings in 2021 alongside rising wages and a range of employee benefits. in the areas of childcare, healthcare and education.

While BofA is one of the largest US companies to issue ESG-themed bonds, it also had $36 billion in credit commitments to energy companies by 2022.

Investors and many companies say it’s a good thing to be concerned about environmental and social factors that could impact earnings, such as rising sea levels or marketing failing to reach certain audiences.

Moynihan is a proponent of stakeholder capitalism, a model in which private companies consider interests beyond those of shareholders, including employees and communities. The word “capitalism” is mentioned 22 times in BofA’s latest 222-page annual report, up from 16 times a year earlier. The number of references to “ESG” dropped from 59 last year to 36 this year.

“Capitalism provides the money, creativity and expertise to solve the needs of society,” Moynihan wrote. “We empower our clients to drive capitalism.”

Still, the CEO acknowledged that there are concerns about whether companies share profits or pay people fairly and equitably.

The lender outlined its ESG goals in the report, including a commitment to net zero greenhouse gas emissions by 2050 and to deploy $1.5 trillion in sustainable finance by 2030.

Reporting by Lananh Nguyen and Nupur Anand in New York; Additional reporting by Isla Binnie in New York and Ross Kerber in Boston; Edited by Josie Kao

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