This story is excerpted from Country Capitalism: How Corporations From The American South Remade Our Economy and the Planet, by Bart Elmore. Copyright © 2023 by the University of North Carolina Press.
“You’re an idiot if you don’t think we have global warming and you don’t think we’re contributing to it,” said Hugh McColl, former CEO and chairman of Bank of America.
Gray-haired and 84, McColl sat in his office overlooking the Charlotte skyline in the Bank of America Corporate Center, his desk strewn with fragmentation grenades that served as paperweights.
That day in 2019, McColl was reflecting on what he had done to promote environmental sustainability when he headed Bank of America from 1998 to 2001. McColl no longer worked for the bank he helped build, but he remained an adviser to the firm’s executives. The grenades were obviously meant to remind visitors that McColl was a hard-driving Marine veteran.
But if McColl had all the attributes of a hard-nosed businessman, he also was an idealist concerned about humanitarian causes, including ecological issues. McColl was no fan of government regulation over what he could do with people’s money when he oversaw his bank, but the environment was another matter.
“What blows my mind,” McColl said, “is how anybody can think it’s good to roll back regulations on water and air.”
“Make America Great Again,” he laughed. “We’re not going to be able to breathe.”
Yet during our interview, McColl struggled to identify any major ecological initiatives he had championed during his tenure as CEO and chairman of Bank of America. The bank’s annual reports issued between 1998 and 2000 made no mention of the environment or sustainability. McColl noted that this was in part because there were no industrywide rules rewarding good actors in the banking industry when he was CEO. He said that if his bank had refused to finance a polluting industry, another financial firm would have come along and snagged that business.
McColl’s lack of action mirrored that of his predecessors. In the 1970s, when the modern environmental movement was taking off, the president of what would later become NationsBank, Thomas Storrs—McColl’s mentor—said he was deeply “concerned” about “air and water pollution” but held that “ecological activities” were not “totally relevant and appropriate to the banking business.” In the end, the best thing a bank could do to help the environment was “make a profit.”
But the story was much more complicated than Storrs suggested. As it grew into one of the world’s largest financial firms, Bank of America and its predecessors accumulated capital by reaping wealth from the countryside to finance suburban sprawl, and channeled its immense assets toward international fossil fuel investments to become one of the largest financiers of oil and gas enterprises in the world.
In 1959, 24-year-old Hugh McColl joined American Commercial, a bank whose predecessors had long helped his father’s cotton business. McColl quickly worked up the ranks as a loan agent, traveling to his native South Carolina drumming up correspondent business on cotton farms in his old backyard. McColl claimed he could size up a cotton farm in no time. It all went back to his roots.
“When I was a little boy, my father made me walk every farm in the county,” he said. “He would make me know who owned what land and what it was good for, what it was worth.” Just eyeballing, he could figure out how much a particular patch of soil could earn from cotton cultivation. This was country capitalism.
In 1960, American Commercial took full advantage of North Carolina’s lax banking regulations to initiate a merger with Greensboro-based Security National. Charlotte, a city where the Federal Reserve had established a branch in 1927, would become the headquarters of the newly merged conglomerate: North Carolina National Bank (NCNB).
McColl rose to become NCNB’s president in 1974, and then chairman and CEO in 1983, when NCNB was fast becoming one of the most powerful banks outside of New York and California. And he successfully lobbied state legislatures to approve what became known as the “Southeastern Regional Banking Compact,” an agreement among southern states east of the Mississippi to allow interstate branching within the region.
McColl immediately moved to take over banks outside North Carolina. When the oil market collapsed in the mid-1980s and First Republic of Dallas started drowning in bad loans, McColl approached the FDIC about buying First Republic—and got approval in July 1988.
It was the “turning point of the company,” McColl said years later. “After that, we did think we were going to build the biggest bank in the country.” This acquisition also tied NCNB more closely to the oil business.
The newly renamed NationsBank got more good news from Washington in 1994: Congress passed a law repealing restrictions on interstate banking. McColl moved quickly to gobble up banks in the Midwest and beyond, boasting that his corporation was now the largest bank in the nation and “one of the largest oil and gas lenders in the world.”
As McColl was spreading his bank west in the early 1990s, Bank of America in California was just emerging from a series of nightmarish events that had threatened its solvency. Bank of America posted over $500 million in losses in 1986.
Its founder, Amadeo Peter “A. P.” Giannini, had followed some of the same country roads to financial prosperity that the McColls had. Born in 1870 to Italian immigrants, A. P. and his two younger brothers grew up on a 40-acre fruit and vegetable farm just outside Alviso, a district in San Jose, California. By the end of the 1940s, when A. P. Giannini died, Bank of America was the largest bank in the world, with 525 branches in California and $6 billion in assets. It remained the biggest bank in the country in 1977.
But a decade later, it was not even in the top 10.
As the firm sought to improve its financial position, managers in the bank became concerned about the water demands of their farming clients. In 1991, five years into a long California drought, Bank of America began requiring farmers to show how they would meet their water needs for the year before offering a loan. To be clear, press reports revealed that Bank of America managers were largely concerned about water at this time because of economic considerations (farmers’ inability to pay back loans) rather than out of a deep concern for the health of California’s farming ecosystems.
Nevertheless, the early 1990s marked the first time the bank began to develop anything that resembled a corporate environmental responsibility program. At this time, many corporations, not just banks, were beginning to launch environmental-sustainability programs because of new environmental regulations as well as renewed environmental activism following the 1984 Bhopal gas leak disaster at a Union Carbide plant in India, which killed thousands of people, and the tragic spectacle of the 1989 Exxon Valdez oil spill.
The firms promising to make the biggest changes after these headline disasters were not banks but chemical companies and other industrial firms, which felt more intense pressure to adopt eco-friendly practices. Congress had recently passed the Right-to-Know Act of 1986, which required companies to report any toxic chemical releases that might come from their facilities. But because Bank of America and other financial firms did not directly own plants spewing deadly compounds into the water or air, they were less visible targets both for regulators and for activists.
In 1991, Bank of America announced that it had joined the Environmental Protection Agency’s Green Lights Program, an initiative to reduce corporate energy demands by installing energy-efficient lighting in company offices. By 1998, Bank of America said it had reduced its greenhouse gas emissions by approximately 40 million pounds, which equated to removing some 3,000 cars off America’s streets.
But even as it marginally reduced carbon emissions with better light bulbs, it was still fueling tremendous fossil fuel consumption by stimulating suburban sprawl. In 1992, the bank had merged with Los Angeles-based Security Pacific, making it “the largest lender in the United States for office, shopping centers, new housing tracts, and other real estate.”
The ecological impact of Bank of America’s specific real estate financing is hard to precisely quantify, though its executives realized that their financing of suburbanization was having adverse effects. In 1995, the firm penned a report with state officials and nongovernmental organizations that made a passionate appeal for a new era of sustainable development: “Sprawl,” the report declared, “compromises one of the most essential assets of California—the beauty and drama of its landscape.”
The publication showed that 95 percent of California’s wetlands had been destroyed by suburban development and noted that over 30 percent of the state’s air pollution came from cars traveling across sprawling highways. But when asked how the report would practically reshape Bank of America’s home loan program, an eco-policy representative at the bank offered little hope for real change. “We will finance housing almost anywhere,” he said, “as long as there is a good market for the house.”
The bank was equally hesitant to take meaningful steps to address climate change. In 1991, the United Nations Environment Programme inaugurated its Finance Initiative, and Bank of America soon became a member. But over the course of the next decade, the firm did little beyond initiatives such as the Green Lights Program, and it did not take focused steps to eliminate fossil fuel investments.
Bank of America later admitted that much of its work in the 1990s focused on reducing the amount of paper the company used and making company offices more energy efficient. It was not primarily focused on lending portfolio overhauls.
And the bank’s lending portfolio was only getting bigger. By that point, it had branches in 10 western states and was breaking ground on its first East Coast bank in Washington, D.C.
The next key step was buying out NationsBank, which would give it unprecedented geographic reach.
But Hugh McColl had other plans.
Unlike its California competitors, there is no evidence NationsBank ever paused to focus on the environmental effects of the rapid suburban growth it was helping to finance in the Sunbelt.
It was full steam ahead as McColl’s bank expanded its business in places like Florida, where ecosystems were rapidly and radically being transformed into suburban homes and resort communities.
By 1998, three years after Bank of America had approached NationsBank about a merger, McColl was outpacing his west coast rival. The North Carolina firm was now a bigger bank.
McColl began Scotch-infused negotiations in a California hotel room and convinced Bank of America CEO David Coulter to accept certain demands, including that the new bank headquarters would be in Charlotte and that the board would have eleven NationsBank representatives to Bank of America’s nine. This was to be a southern company, one that would now have outsized influence on global economies and ecologies. In 1998, when these two banks became one, Hugh McColl was at the helm.
With its combined assets of more than $600 billion, Bank of America could turn natural resources mined, farmed, and piped from ecosystems across the globe into tremendous capital pools that could be deployed in massive industrial projects, including fossil fuel extraction.
A year after the merger, President Bill Clinton repealed provisions of the Glass-Steagall Act that had prevented mergers between commercial and investment banks since the Great Depression. Now, Bank of America and other financial firms could accumulate even more financial strength as it gained new access to securities markets. In 1980, not a single bank made it onto the top twenty of the Fortune 500 list. Three decades later, Bank of America, Citigroup, JP Morgan Chase & Co., and Wells Fargo all did.
Environmental organizations started to notice that financial firms had grown incredibly powerful and began campaigns to highlight how big banks were fueling climate change and ecosystem degradation around the world. The Rainforest Action Network (RAN) played a leading role, initiating its first big commercial and investment bank protests in the early 2000s.
Founded in 1985 and run by fiery activist Randy Hayes, RAN had attacked the World Bank and multinational firms like Burger King in the past, but it had never adopted a focused and sustained strategy centered on large financial firms. Following a successful 1999 campaign that forced Home Depot to limit its use of old-growth timber, RAN launched its new plan of action. It started with New York-based Citigroup, demanding that the firm end loans supporting logging in old-growth forests, cease funding for oil drilling in environmentally sensitive ecosystems, and begin the process of terminating financing for fossil fuel extraction.
The organization was unrelenting, hanging banners at company headquarters in New York, sending campaigners to chain themselves to the entrances of Citibank branch offices across the country, and taking out full-page advertisements in national newspapers, including one that featured a photo of Sanford I. Weill, CEO of Citigroup, and read: “Put a Face on Global Warming and Forest Destruction.”
Three years into the Citigroup campaign, RAN sponsored a stunning TV commercial featuring actress Susan Sarandon cutting Citigroup credit cards as a protest against the company’s funding of deforestation around the world. Weill ultimately decided to sit down with Hayes to negotiate. In January 2004, Citigroup agreed to halt any financing of illegal timber cutting and said it would scrutinize its fossil fuel investments, although it made no major commitments to end oil and gas financing.
Bank of America soon fell in line. Ken Lewis, who took over from Hugh McColl in 2001, agreed to work with RAN. In 2004, Lewis signed an agreement pledging to cut Bank of America’s carbon emissions 7 percent by 2008, and to end financing of logging in tropical old-growth forests.
“At Bank of America,” Ken Lewis said, “we know we have an opportunity and responsibility as leaders to promote sustainable, environmentally sound economic growth in all our communities.”
As part of the agreement, Lewis created an “environmental council” tasked with looking over the bank’s asset portfolio and recommending areas where the firm could improve its ecological footprint. The bank also said it would continue to work closely with the Coalition for Environmentally Responsible Economies, an organization founded in the wake of the 1989 Exxon Valdez oil spill that sought to establish effective metrics for assessing the environmental performance of multinational firms, including banks.
RAN gave Bank of America kudos in May 2004, running a full-page ad in The New York Times about the Charlotte bank’s pledge to reduce its emissions: “What did Bank of America do for Earth Day? The right thing.”
But this period of good feelings between RAN and big banks was short-lived. In 2005, RAN organized a series of demonstrations targeting J. P. Morgan for financing industries that were contributing to climate change. In May, activists visited the Greenwich, Connecticut, neighborhood of the J. P. Morgan Chase CEO William B. Harrison Jr., hanging “Most Wanted” posters that dubbed Harrison the “Billy the Kid” of eco-crime. A month later, Harrison agreed to launch a series of environmental programs designed to address key RAN concerns, such as stopping loans to logging companies operating in sensitive ecosystems.
RAN then refocused its energies on Bank of America. In September 2007, RAN activists put up huge signs outside the headquarters of Merrill Lynch that said Bank of America was accelerating global warming through its fossil fuel investments. The following month, RAN activists hung a 50-foot banner from a construction crane positioned in front of the bank’s corporate tower in Charlotte: “Funding coal: killing communities.”
Facing unrelenting protests covered by The New York Times, CNN, and other popular media outlets, in 2007 Bank of America announced a major plan to use its financial resources to deal with global warming. The company made a pledge to spend approximately $20 billion over the course of a decade to “address climate change.”
The bank also launched a Brighter Planet Visa card, which offered bank clients the option to commit reward points toward environmental initiatives. In 2009, the firm paid for a full-page ad in The New York Times announcing its intentions and happily noted in its annual report that it had already “delivered more than $5.9 billion in lending, investing, and new products and services, including nearly $900 million in financing for renewable and energy efficiency projects in 2009 alone.”
All seemed well, but these corporate sustainability statements belied the reality that Bank of America continued to be a prime financier of fossil fuel industries. In its 2010-11 annual report, RAN found that Bank of America had channeled more than $4.3 billion in just the past two years toward the extraction and consumption of coal, making it “the largest financier of coal in the country.”
In 2010, RAN, working with the Sierra Club and BankTrack, published its first report card detailing major banks’ fossil fuel investments. The 2010 report, which centered on mountaintop removal, noted that nine banks, including Bank of America, Wells Fargo, and Citi, contributed “more than $3.9 billion in loans and bond underwriting to companies practicing mountaintop removal coal mining.”
RAN redoubled its protest efforts against Bank of America with a national campaign, calling on people to close their accounts with the bank. At the time, RAN was feeding off popular unrest against the banks that had festered since the recession and bailouts of 2008. The same year that the Occupy Wall Street movement surged in New York City, RAN initiated a broad grassroots campaign in Charlotte, with frequent demonstrations at company headquarters.
Right before the annual shareholders’ meeting in 2012, RAN activists pulled off a daring feat, rappelling down the face of Bank of America Stadium and hanging a 70-foot banner: “Bank of Coal.”
Two months later, Bank of America announced a new pledge to commit $50 billion over 10 years toward mitigating climate change.
But RAN kept the pressure on. The organization infiltrated Bank of America’s shareholders’ meeting in 2013, and 24 activists took to the microphone in protest. At one moment, the flustered CEO Brian Moynihan fired back from the stage, “Is there anyone out there who has a question that isn’t about climate change?”
Bank of America responded with a pledge to get out of the mountaintop removal mining business, and in its 2013 annual social responsibility report, happily noted that it had spent more than “$27 billion in financing for low-carbon activities, such as energy efficiency and renewable energy.” That year, the company announced that it would issue $500 million in “green bonds” to “finance energy efficiency and renewable energy projects.”
This won Bank of America recognition as an environmental leader in financial circles. By 2015, it earned listing on the World and North American Dow Jones Sustainability Indices, and the Carbon Disclosure Project and the White House also honored the bank among sustainability leaders.
But in 2016, just as Bank of America announced that it had directed $15.9 billion “to support clients connected to clean energy and other environmentally supportive activities,” RAN reported that the firm also had spent $36 billion—more than twice as much—financing the fossil fuel industry, making it the third-largest financier of fossil fuel firms in the world.
Fracking was also a significant part of Bank of America’s investment plan in the 21st century. As the bank announced a new climate pledge to devote $300 billion toward “clean energy finance” by 2030, the bank remained one of the top financial firms funding fracking around the globe, spending over $10.9 billion in 2019 alone. It spent only $8.9 billion on solar energy projects between 2007 and 2018.
By the end of the 2010s, environmental campaigns against banks began to spur political change on Capitol Hill. In April 2019, during a House Financial Services Committee hearing on banking regulations, Rep. Rashida Tlaib (D-Mich.) grilled Bank of America’s Brian Moynihan and other major bank CEOs on their failure to reduce financing for the oil and gas industries: “You are greenwashing your own track record,” she said, “and duping the American people into believing that you are helping to address climate change.”
Senator Elizabeth Warren (D-Mass.) and her colleague Brian Schatz (D-Hawaii) proposed the Climate Change Financial Risk Act of 2019, which tasked the Federal Reserve with investigating climate change risks in the financial system. When Senator Warren ran for president a few months later, she spoke passionately about the need for climate change amendments to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, a law set up to deal with predatory lending practices and other bad banking behavior that caused the 2008 recession.
As Warren pointed out, this law had no teeth when it came to forcing banks to address their contributions to climate change. But she said it could.
Language in that law already empowered the Treasury Department’s Financial Stability Oversight Council to investigate “systemic risk” and push big banks to adjust investments that would be harmful to the public interest. It just needed an administration willing to put the plan in place. In May 2021, President Biden signaled that his administration was sympathetic to Warren’s position, signing an executive order tasking the secretary of the treasury and heads of other federal agencies with discussing “approaches to incorporating the consideration of climate-related financial risk into their respective regulatory and supervisory activities.”
Bank of America had clearly entered a new era in American finance by that point. In the face of continued pressure, its leaders pledged billions of dollars to climate change remediation and became a leader in marketing new financial instruments, such as green bonds, to develop new eco-friendly infrastructure. They also said the bank supported the Paris Climate Accords, that they were committed to reaching “net zero” emissions by 2050, and that they had plans to be more transparent in their emissions reporting.
And yet—the bank has continued to make major financial investments in fossil fuel extraction. As this book went to press, the Sierra Club and RAN were pressuring Bank of America to stop channeling money toward Enbridge, the company building a new pipeline that would expand capacity to ship Canadian tar sands oil to U.S. refineries.
And so the fight continues, as activists and regulators battle to redirect capital flows away from fossil fuel projects to prevent rising seas from overtaking Wall Street.
Bart Elmore is an award-winning professor and writer who investigates the impact of big business on our environment. His books include Seed Money: Monsanto’s Past and Our Food Future and Country Capitalism: How Corporations from the American South Remade Our Economy and the Planet (UNC Press/Ferris Books, May 2023).