23 September 2014: Bank of America has announced a Catalytic Finance Initiative to stimulate US$10 billion worth of new investment in clean energy projects. The initiative will focus on developing or advancing innovative financing structures that reduce investment risk, and attract a range of institutional investors.

Announced at the UN Climate Summit session on finance, Brian Moynihan, Bank of America CEO, said his bank will commit US$1 billion to investment structures that employ de-risking tools, developed together with development finance institutions, insurance providers, foundations and institutional investors. The initiative aims to make clean energy investments more appealing, particularly in emerging markets where project impact often addresses other issues like health, education and job creation.

The initiative will: ensure that at least US$10 billion of incremental capital is used for renewable energy, energy efficiency and energy access; target larger-scale financing opportunities that use de-risking structures, such as first loss and mezzanine tranches, risk guarantees and insurance products to ‘crowd-in’ capital that would not otherwise be deployed in this sector; and explore the possibilities of working with foundations and impact-focused clients to support smaller, energy access opportunities.

Mindy Lubber, President of Ceres and Director of the Investor Network on Climate Risk, stated that accelerating clean energy investments is not only about stronger government policies to incentivize low-carbon technologies, but also about “creating a broader array of financing vehicles that investors can utilize to stimulate capital flows.” She said the Bank of America’s initiative is “hugely important” because it recognizes the financing gap and aims to help bridge it.

Since 2007, Bank of America has dedicated US$31.7 billion to low-carbon and other environmental business activities, and in June 2012, in conjunction with the Rio+20 Conference, it announced a ten-year, US$50 billion goal to advance lower-carbon economic solutions through, inter alia, lending, equipment finance, capital markets and advisory activities, and carbon finance. [Bank of America Press Release] [UNEP Press Release]