The Greening of BankAmerica

BankAmerica has gone green.

The first evidence came in January, when the San Francisco-based giant circulated a set of environmental principles to its employees and installed a senior vice president to head an office of environmental policies and programs.

Then, in April, chairman Richard Rosenberg announced that Bank of America will donate up to $6 million in Latin American debt to three conservation organizations working to preserve rain forests in Mexico, Central America, and South America.

In the latest green twist, BankAmerica Corp. is leading an effort to raise $400 million for a new not-for-profit entity that would clean up catastrophic oil spills. The outfit, Marine Spill Response Corp., is indirectly owned by a coalition of the country's largest oil companies. A meeting to persuade about a dozen other banks to join the credit was held in New York last week.

"At BofA you are seeing a response to consumer demands about what is right blending with the personal beliefs of the people that have become the leaders of the institution," said Peter A. Seligmann, chairman and chief executive of Conservation International, one of the beneficiaries of the bank's debt-for-nature swap.

BankAmerica's environmental efforts are driven by a savvy mix of good intentions and good business. Its top executives have a true commitment to the cause, according to people close to management, but also want to score with the bank's green-leaning customers in California.

BankAmerica also may see opportunity in funding one of the fastest growing business sectors in the nation. The cost of cleansing the nation's air, water, and waste over the next 50 years is estimated to be between $500 billion and $1 trillion, in today's dollars. That could mean an enormous opportunity for banks willing to lend to companies that range from waste recyclers to manufacturers of catalytic converters.

Citicorp Upgrading |Sensitivity'

BankAmerica is not the only financial company pushing the green front.

Citicorp has hired consultant Cynthia Stone to, in her words, "increase sensitivity to environmental issues at all levels of the bank and across businesses."

Working through the company's corporate affairs office, Ms. Stone is developing an employee communications effort to be unveiled in a few months. Until now, the major effort has been to include organizations such as the National Audubon Society as part of the $25 million in grants and contributions Citicorp makes annually.

Practical Results Elusive

BankAmerica, at least initially, has not sought much publicity for its more ambitious efforts. That may be because it has not yet determined how to implement the most controversial tenet of its environmental principles: a promise to curb loans to polluters or other ecologically irresponsible corporations.

"That is real easy to say, but it's a whole lot harder to apply it to our customers," admitted Richard Morrison, the senior vice president who coordinates BankAmerica's environmental policy efforts.

"Any credit decision has a number of factors going into it, and environment isn't always the overriding one. We are still figuring it out, but we do have a say in the credit decision."

In the past year, BankAmerica has been the lead bank on big loans to Dow Chemical Co., IMC Fertiizer Group, several large pulp and paper manufacturers and other corporations in industries that are prone to environmental difficulties.

"These are large companies that are in the mainstream of their industry," said Mr. Morrison, a 25-year BankAmerica veteran who previously specialized in world banking products, such as travelers checks and foreign currency services. "We are not in a position to tell them what to do."

Few lenders at BankAmerica or other institutions have yet to see the lending policy in action. "I've never had anybody give environmental issues as a turndown for a loan," said a loan syndication official at Citibank. "I've never seen a call report listing environmental concerns as a parameter."

Mr. Morrison said that one of the biggest problems in monitoring compliance with the new policy is the fact that "thousands of loan officers" are talking to customers every day.

"If these people understand the policy, they will turn off a bad guy real early in the process, and nobody would ever see it," he said.

That problem will only be exaggerated when BankAmerica completes its planned merger with Security Pacific Corp. Bank officials will not comment on any aspect of the merger, though Mr. Morrison said the environmental policy is meant to apply to all bank employees worldwide.

Effort Carries High Price Tag

When it comes to other parts of the program, however, there is little doubt that the bank is spending time and money.

In his introduction to the bank's environmental principles, Mr. Rosenberg wrote that the company's "day-to-day business operations have a limited direct impact on the environment, unlike an industrial company.

"But we realize that our resources are channeled to companies that have enormous impacts on the environment, and that we can promote change by how those resources are allocated."

Those are fighting words, when coupled with an internal newsletter defining the green policy as encompassing "everything from recycling paper to rejecting commercial loan customers who display a chronic disregard for the environment."

Roster of Initiatives

The environmental principles were developed over a five-month period last year by SRI International, a consultant in Menlo Park, Calif. that worked with more than a dozen senior executives at BankAmerica. Since then, the Bank has taken a number of initiatives, both practical and informational:

* It has hired GreenCross, a certification group that reviews the origin of products and supplies purchased by the bank company. The bank will not buy furniture made of tropical hardwoods from rain forests, and GreenCross is double-checking the certification of certain suppliers that are suspect.

* It is working with other Bay Area companies on purchases of recycled paper products, in order to lower costs and encourage production by suppliers.

* It has instituted recycling programs at all branches - including recycling oil and transmission filters from company cars - and expects to have some 450 administrative buildings and offshore branches involved in the program next year. The bank even has its large plastic mail sacks melted down and resurrected into new plastic bags by an Oregon recycler.

* It has centralized control over heating, water use, and air conditioning in some 2,000 of its buildings, and developed an environmental checklist of 65 items to assess the impact of any new building or design project.

* It has contributed $500,000 toward the founding of an Environmental Analysis Center on atmospheric pollution at the California Institute of Technology. The bank's philanthropic division also has budgeted $100,000 this year to give to environmental causes, and is encouraging branches to focus on local environmental projects in a $50,000 program.

* The bank devotes a column to environmental issues as part of a four-page monthly newsletter sent to checking account customers. It also has started a Green Ideas in Action campaign that offers money to employees who come up with useful environmental tips.

Though Mr. Morrison's staff consists only of a vice president and a secretary, bank sources said pressure to adhere to the new green code is coming from Lewis Coleman, the vice chairman for wholesale banking and an ardent conservationist; Peter MacPherson, an executive vice president in charge of Third World debt, who is working gratis with Conservation International; and Thomas Peterson, a vice chairman in charge of retail banking.

"There are a lot of banks that have done things, such as starting recycling programs," Mr. Morrison said. "But no one has the comprehensive full-court press that we started. It's not like other parts of banking where, if you don't do it, there are 20 other banks that can."

PHOTO : ECOLOGICALLY CORRECT: BankAmerica has donated $6 million of its Latin American debt to help save rain forests in Mexico and Central and South America.

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