The bank CEO preaching sustainability

From: POLITICO's The Long Game - Wednesday Mar 02,2022 05:02 pm

Mar 02, 2022

VERBATIM

Brian Moynihan looks on.

Some lawmakers have questioned Brian Moynihan’s capitalist bona fides. | (Michael Probst/AP Photo)

When he’s not running Bank of America, Brian Moynihan is preaching the gospel of doing well by doing right. He chairs the World Economic Forum’s International Business Council, is a member of the Vatican Council for Inclusive Capitalism, and co-chair of the Sustainable Markets Initiative launched by Prince Charles.

Since being named CEO in 2010, Moynihan has pushed an environmental, social and governance agenda that seems to be working for shareholders. He talked with Lorraine Woellert about what the bank has been up to, what business needs from government to help it reach environmental goals, capitalism, and the genius of the “and.”

This interview has been edited for length and clarity.

Bank of America reported record profits last year even as it upped spending on employee daycare and mental health. You regularly award stock to rank-and-file workers and your hourly minimum wage is $21. What’s the thinking?

I'm just trying to get the work done. We've been investing in teammates, so it probably came up as a number one priority, frankly, in 2020, to keep the teammate safe and do everything we could to enable them to be safe.

You’re hearing about turnover rates and the great resignation. Our turnover rate in 2021 was basically the same as it was in 2019.

So, looking through an ESG lens, Bank of America has seen the light?

We talk about delivering on the genius of the “and”, which is we have to deliver for our shareholders and for society.

As stakeholder capitalism gains steam, there’s pushback: How is this good for the bottom line? How is this capitalism?

I've been asked if I’m a capitalist at congressional hearings and things like that. The answer is, absolutely.

On a one-, three-, five-, 10-year stock price performance basis, we have produced for the shareholder at the same time we’ve produced for our communities and our employees and our customers. The idea is to produce for all of them. It's a virtuous circle.

The opposite of the genius of the “and” is being the chairman of the “or” — profits or, shareholders or. We believe in the and. Whether it's the work do on a just transition, the work we do on the employee stuff, there has to be an economic model that sustains it.

Are you still on track to begin reporting your portfolio emissions?

By year end this year, we're supposed to do it. Our clients are making this transition and our job is to help them make it.

Is that really the bank’s job?

It is and it isn't. If you're in the supply chain for an auto company and you make wheels for the car, at some point those buyers say I'm net zero.

Net zero for them doesn't mean the car’s emissions. The issue is how the car is built. So our clients are at risk if they make that wheel unless they understand how they make the transition so they can be in that supply chain.

If they're facing a business challenge that they haven't faced the past, who better educate them than their bank for 30 years, saying here's what's coming, here's how to think about it?

Brian Moynihan pull quote.

Banks and investors take heat for not simply cutting polluters loose.

The binary decision of invest-not invest, lend-not lend, do business with or not do business with — that doesn't change the behavior of those companies. You want those companies to declare net zero, put a plan on the table. Then society wants to hold them accountable.

How do we get to accountability?

If you make metrics part of the official sector, then you can see who's making progress. Then the decision isn't, “Yep, there's 12 companies in this industry, let me get out of all 12.” It's, “These 10 are making progress, I'll stay with them and those two will start to suffer.”

You’re working across sectors to get the various metrics to converge.

Remember this key thing, if you believe that changes need to happen, it isn't going to happen by charity. There’s just not enough money. There $6 trillion or $7 trillion per year required to make these changes happen. All the foundations of the world have a couple trillion dollars in them or less.

What you're doing is putting a perpetual motion machine called capitalism to drive this change. It will not happen otherwise. It just won't happen. Governments could try to regulate it. But as you know, the sticking power of those regulations ebb and flow.

Some politicians and governments just don’t buy into stakeholder capitalism.

We don't need money from governments, frankly. What we need is some help. Take sustainable aviation fuel. The industry wants a mandate for sustainable aviation fuel as a percentage of total fuel used. That can create the market to create the factories to produce the SAF.

If governments would put a line or two into these communiques — SAF at 10 percent — that would create an industry which frankly would go right through that 10 percent. That’s a modest mandate.

We asked them to put a price on carbon, to say it’s X, so we can all shoot at X, as opposed to now where one person says it’s this, one person says it’s that, how much capture is worth, or offsets or reduction. We need to have a standardized cost of carbon.

Brian Moynihan pull quote.

Carbon pricing is dead in Congress and President Joe Biden’s social cost of carbon is being challenged in court. Yet corporations are putting their own prices on carbon to guide decision-making.

When we say we're net zero, that effectively is an internal tax on our carbon usage. Every company has said that. That calculation uses the social cost of carbon in our case.

We are saying a flight that our investment banker or our commercial banker takes is a cost. We're saying that if we're net zero, that that is a cost. We’ve got to ensure the planes are flying on SAF or buy equivalents, which is what we're doing.

People forget that, effectively, a carbon tax is going around the world through all these commitments. Because at the end of the day, if you can't reduce your usage, you're going to have to pay your way out of the rough, so to speak.

This seems like a failure of government, carbon pricing. It seems like a simple thing.

We have said it's a straightforward thing. Nothing's ever simple.

POLITICO has Moynihan’s full interview here.

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