Chief executives of the country's largest banks testify at a Senate Banking, Housing, and Urban Affairs hearing on Capitol Hill in Washington
Bank of America Chairman and CEO Brian Moynihan testifies before a Senate Banking, Housing, and Urban Affairs hearing on "Annual Oversight of the Nation's Largest Banks", on Capitol Hill in Washington, U.S., September 22, 2022. Reuters

Bank of America Corp's Chief Executive Officer Brian Moynihan had a clear message for shareholders on Tuesday: "We are capitalists."

The proclamation from the head of the second-largest U.S. lender might seem obvious, but comes at a time when Wall Street titans face more criticism for embracing environmental, social and governance (ESG) considerations.

"I've sometimes been surprised to be asked - including at Congressional hearings - 'Are you a capitalist?'" Moynihan wrote in the bank's annual report published on Tuesday. "You might also find the question unusual. Of course, I answered, 'Yes.'"

In January, Moynihan told Reuters that "capitalism is the system that will drive the best outcome, and so we believe in profits and purpose," he said, pointing to the bank's record earnings in 2021 alongside its rising wages and a raft of employee benefits across childcare, health and education. BofA is also one of the largest U.S. corporate issuers of ESG-themed bonds.

Investors and many companies say it is good business to be concerned with environmental and social factors that can affect profits, such as rising sea levels or marketing that does not reach certain audiences.

Some U.S. Republican politicians have attacked banks and asset managers for their treatment of energy companies and consideration for issues such as climate change and workforce diversity, claiming they have put ESG considerations ahead of shareholder and saver returns.

Investors have also pulled back from ESG funds as high oil prices have hurt returns, but top asset managers have largely stood by many efforts with a social or environmental focus.

Moynihan is a proponent of stakeholder capitalism, a model in which private corporations take into account interests beyond those of shareholders, including workers and communities. The word "capitalism" is mentioned 22 times in BofA's latest annual report spanning 222 pages, rising from 16 times a year earlier. Its references to "ESG" fell to 36 times this year from 59 times last year.

"Capitalism provides the money, the creativity, and the expertise to solve the needs of society," Moynihan wrote. "We enable our customers to drive capitalism."

Still, the CEO acknowledged there are concerns about whether companies share profits or pay people fairly and equitably.

The lender outlined its ESG goals in the report, including a pledge to achieve net zero greenhouse gas emissions by 2050 and deploy $1.5 trillion in sustainable finance by 2030.