Bank of America Redefines Green Money

Twenty billion dollars -- that's how serious Bank of America is about its new environmental initiative. In a press release, the chief executive of America's largest bank, Kenneth Lewis, said he sees "a tremendous opportunity to support our customers' efforts to build an environmentally sustainable economy," and the company is betting more than any other financial institution that it can profit from the environmental movement.

The new program has two major components: carbon trading and green consumer credit. Smaller components include donations to ecological organizations and a commitment to LEED certification for B of A's new buildings.

Developing the capability to trade carbon credits, as the Chicago Climate Exchange does, will provide a new source of revenue from derivatives and other carbon-related financial instruments. Some people are skeptical of the effectiveness of carbon trading, but analysts expect Bank of America to benefit from the new business.

Green consumer credit will come in the form of a new credit card, where the bank donates a certain amount to environmental organizations for every dollar consumers spend. Cause-marketing isn't new to retail banking (think WaMoola for Schools), but it's novel to bring it to the environmental cause.

The environmentals benefit of Bank of America's new initiative will be hard to see, since it doesn't work directly to protect the environment like, say, a beach clean-up. But analysts expect the bank to come out ahead with interchange fees -- and a fresh, clean image.

(Image of wind turbine by Paleontour, CC 2.0)