Americas ESG Financing House: Bank of America
Navigating headwinds Bank of America brought environmental, social and corporate governance considerations to a wider range of transactions in 2024. For broadening the scope of sustainable finance and banking innovative climate technologies, Bank of America is IFR’s Americas ESG Financing House of the Year.
Bank of America has pioneered new forms of climate finance under the US Inflation Reduction Act and provided ESG-focused financing across project finance, tax credit transfer and capital market transactions.
In 2024, the bank closed a US$205m tax equity financing deal with biofuel producer Harvestone Low Carbon Partners that will capture more than 200,000 tonnes of carbon dioxide annually at its ethanol facility in Underwood, North Dakota.
The transaction is one of the biggest carbon capture investments since the IRA was introduced in 2022 and significantly increases the amount of tax credits for the technology.
“We were just really pleased to assist a very fossil fuel-heavy state with their determination to invest in carbon capture and sequestration,” said Karen Fang, global head of sustainable finance. “It becomes one of the most important technologies for us to incubate and support.”
BofA was coordinating lead arranger and lender for a US$440m facility in Linden, New Jersey, that will convert food waste from the New York metropolitan area to renewable natural gas.
The project is one of the largest RNG facilities in the US and will avoid the emission of 120,000 tonnes of carbon dioxide annually on completion in late 2025.
As the IRA allows tax credits generated by these projects to be transferred, Bank of America is establishing itself as a middleman and market maker of the new tax credit transfer market, which grew to around US$25bn in 2024.
The bank has already discussed investing in clean energy tax credits to cut corporate tax bills with more than 150 companies and closed billions of dollars of transactions with nearly 40 companies, covering renewable energy projects, energy storage and electric vehicle battery tax credits, Fang said.
In a year when ESG-labelled bonds continued to face pressure amid an anti-ESG backlash, BofA maintained its resilience and logged US$8.4bn in deal volume, placing it third in the Americas region, according to LSEG data.
In February, the bank was joint active bookrunner on Dow Chemical’s inaugural US$1.25bn dual-tranche green bond, which part-funded the world’s first hydrogen-fuelled ethylene plant to achieve net zero on Scope 1 and 2 emissions in Fort Saskatchewan, Alberta.
The offering was well received by investors looking to fund decarbonisation in high-emitting sectors and achieved a significant greenium over conventional bonds.
BofA was also joint bookrunner and lead green structuring coordinator on PVH’s inaugural €525m green bond in April as the owner of Tommy Hilfiger and Calvin Klein fashion labels looked to fund its sustainable initiatives and tapped the euro market to attract ESG investors.
Andrew Karp, global head of the sustainable banking solutions group, said BofA is also advising its ECM clients to position themselves to appeal to ESG investors even though their equity raises may not have a designated ESG label.
New York-listed Amer Sports’ US$1.57bn IPO in February included an ESG workstream and highlighted its sustainability commitments in its offer documents.
BofA also led a R$14.8bn (US$2.7bn) jumbo stock offering for Sabesp – Latin America’s biggest water utility by market value – marking the first green-designated equity offering on the Brazilian stock market.
In late December, BofA completed a US$1bn debt-for-nature swap to refinance Ecuador’s junk debt and allocate the interest savings to conservation efforts in the Amazon ecosystem. The deal was BofA's second debt swap and showcased growing appetite and its ability as an arranger.
As BofA continues to work towards its US$1.5trn sustainable finance goal by 2030, it must confront more hostile climate policies under US president Donald Trump's administration.
BofA is committed to financing climate and social solutions regardless of the political environment, and will simply adapt and redesign deal capital stacks if green incentives are repealed, Fang said.
“Our stance is very consistent and that’s very reassuring and comforting for our clients,” she said. “The leadership and stability in the private sector are much more pronounced than global governments right now.”
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