Environmental Leadership and Impact Investing

In an increasingly globalized world and economy, investment leadership financially and environmentally are more important now than ever

January 1, 2017

We live in a rapidly changing world, but one thing that won’t change anytime soon is the reality of climate change. Climate change has already resulted in a 1 degree increase in average Earth temperatures, which has shifted weather patterns and reduced access to potable water around the globe. The Paris Climate Accord was an acknowledgment by 190 countries that climate change is not a political or economic issue; the intent of the accord is to strengthen the global response to the threat of climate change by keeping the global temperature rise this century well below 2 degrees Celsius. 

While politicians around the globe are only beginning to acknowledge this existential threat, some forward-thinking companies have already begun to implement meaningful change. Bank of America was named to Fortune’s 2016 Change the World list, as one of 50 companies that has made an important social or environmental impact through its profit-making strategy and operations. Since 2007, we have provided $53B in low-carbon financing to support a wide range of projects, including solar, wind, water, and biofuel to name a few. We expanded that commitment last July when we became one of the first companies to sign on to the White House’s American Business Act on Climate Pledge. We increased our environmental business commitment to provide $125B toward environmental business initiatives by 2025 through lending, investing, capital raising, advisory services, and developing financing solutions for clients around the world.2  And in 2014, Merrill Lynch signed the United Nations supported Principles for Responsible Investing (PRI) which is an international network of investors working together to understand the implications of sustainability for investors, and support signatories in incorporating these issues into their investment decision-making and ownership practices.3

Bank of America continues to be the No. 1 underwriter of green bonds and issued our second green bond for $600M.  The bond will help to fund renewable energy, including wind and solar, and energy efficiency projects, such as lighting retrofits.2   This type of Impact Investment highlights how we can use innovative finance to address the crisis of climate change.

“Bank of America continues to be the No. 1 underwriter of green bonds and issued our second green bond for $600M.

In 2015, the U.S. Environmental Protection Agency (EPA) recognized Bank of America for our leadership in addressing the climate change crisis. The green projects that we support are an integral part of Bank of America’s culture of sustainability. Bank of America has already reduced our carbon footprint and water consumption by more than 1/3 since 20124 and in September, set the goals to achieve carbon neutrality, purchase 100% renewable energy, reduce landfill waste by 35% and greenhouse gases (GHG) by another 50%.2

Impact investing is more than a powerful trend, it is a structural shift. The rise of the conscious consumer is also evidenced in investing patterns whereby ‘doing well’ and ‘doing good’ are no longer mutually exclusive. Merrill Lynch and US Trust have created a dynamic range of investment approaches in an attempt to generate both financial returns and positive measurable social impact. Social Impact Bonds (SIBs) are an example of an innovation in finance and a new type of investment that aligns our client’s wealth with purpose. While this innovation is relatively recent, we see an opportunity for certain investors to dedicate a portion of their portfolio to address specific social purposes that have the potential for investment returns and social impact.5

As part of A Transforming World, BofA Merrill Lynch’s Global Research identifies long-term themes correlated with Impact Investing that may be considered as market conditions change. Investing behind themes such as Water, Sustainable Assets, Alternative Energy, Food Security, Energy efficiency & Clean Tech take a Goals Based Investing conversation much further. investors no longer have to choose between doing well or doing good, as impact investing and transformational finance presents an opportunity for the potential to do both.

1 NY Times
2 Bank of America Report, 2016
3 Bank of America 2015 Business Standard Report
4 Bank of america Report, June 2016
5 Bank of america Report, October 2016

Social impact investing is a relatively new and evolving investment opportunity which is highly speculative and involves a high degree of risk. An investor could lose all or a substantial amount of their investment.

Merrill Lynch makes available products and services offered by Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPF&S), a registered broker-dealer and Member SIPC, and other subsidiaries of Bank of America Corporation (BofA Corp.)

Investment products and services may be available through a relationship managed by U.S. Trust, Bank of America Private Wealth Management, or through a relationship with MLPF&S. Certain U.S. Trust associates are registered representatives with MLPF&S and may assist you with investment products and services provided through MLPF&S and other nonbank investment affiliates. MLPF&S is a registered broker-dealer, Member SIPC and a wholly owned subsidiary BofA Corp. U.S. Trust, Bank of America Private Wealth Management, operates through Bank of America, N.A., and other subsidiaries of BofA Corp.

Any information presented in connection with BofA Merrill Lynch Global Research is general in nature and is not intended to provide personal investment advice. The information does not take into account the specific investment objectives, financial situation and particular needs of any specific person who may receive it. Investors should understand that statements regarding future prospects may not be realized. BofA Merrill Lynch Global Research is equity research produced by Merrill Lynch, Pierce, Fenner & Smith Incorporated and/or one or more of its non-U.S. affiliates. BofA Merrill Lynch Global Research does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

The Private Banking and Investment Group is a division of MLPF&S that offers a broad array of personalized wealth management products and services. Both brokerage and investment advisory services (including financial planning) are offered by the Group’s Private Wealth Advisors through MLPF&S. The nature and degree of advice and assistance provided, the fees charged, and client rights and Merrill Lynch’s obligations will differ among these services. Investments involve risk, including the possible loss of principal investment. The banking, credit and trust services sold by the Group’s Private Wealth Advisors are offered by licensed banks and trust companies, including Bank of America, N.A., Member FDIC, and other affiliated banks. Investment products: Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value MLPF&S is a registered broker-dealer, a registered investment adviser, Member SIPC and a wholly owned subsidiary of BofA Corp.

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