The roadmap for investing in a sustainable world

Solving the world’s big environmental and social problems will require billions in private capital. You can invest in businesses that work for a better world — here’s how.

 

AT A TIME OF RISING TEMPERATURES and shrinking forests, when more than 800 million people are undernourished and nearly a third of the global population lacks safe drinking water,1 the world’s environmental and social challenges can seem insurmountable. And yet, the desire of private investors to help find and create solutions keeps growing.

At the end of 2019, the Global Impact Investing Network (GIIN) estimated that more than 1,720 organizations were managing $715 billion in impact investing assets worldwide.2 But what will it take to translate desire into tangible, lasting solutions for problems so large? The world has trillions of dollars to invest in infrastructure and environmental change. The question is, can it get organized? It’s a question the United Nations Sustainable Development Goals (SDGs) seek to answer — and in doing so, provide both individual and institutional investors the opportunity to put their money where it has the greatest impact.

“Now, individuals can direct their investment dollars to join the movement to harness trillions of dollars in capital toward creating a more sustainable future for us all.”

— Jackie VanderBrug, head of Sustainable & Impact Investment Strategy for the Chief Investment Office, Merrill and Bank of America Private Bank

 

While you can’t invest directly in SDGs, the goals create a roadmap for putting the vast power of capitalism to work on 17 goals that range from ending world hunger to increasing access to clean and renewable energy. That means funding industries that are working to develop products and solutions to meet the goals outlined by the SDGs. And it means financial firms developing innovative investment opportunities large enough to address global needs, yet flexible enough to attract institutional or individual investors at whatever level of risk and reward is most comfortable for them.

Solutions as large as the challenges

“The SDGs are a game changer because they have been designed with private investors in mind,” says Jackie VanderBrug, head of Sustainable & Impact Investment Strategy for the Chief Investment Office, Merrill and Bank of America Private Bank. “Now, individuals can direct their investment dollars to join the movement to harness trillions of dollars in capital toward creating a more sustainable future for us all.”

These 17 broad, interrelated sustainability goals are supported by clearly defined measurement requirements and success metrics.

Illustration is a three row graphic with the following text and images. Header reads: Sustainable Development Goals. Text reads: “1: No poverty”; illustration of two men, two women and two children. Text reads: “2: Zero hunger”; illustration of a bowl with steam. Text reads: “3: Good health and well-being”; illustration of a heartbeat and heart. Text reads: “4: Quality education”; illustration of an open book and a pencil. Text reads: “5: Gender equality”; illustration of an intersex gender symbol with an equal sign in the circle. Text reads: “6: Clean water and sanitation”; illustration of a cup of water with a downward arrow on the underside. Text reads: “7: Affordable and clean energy”; illustration of a computer start button with sun rays around it. Text reads: “8: Decent work and economic growth”; illustration of a bar graph with an upward line graph above it. Text reads: “9: Industry, innovation and infrastructure”; illustration of three stacked cubes. Text reads: “10: Reduced inequalities”; illustration of an equal sign surrounded by a circle. Text reads: “11: Sustainable cities and communities”; illustration of four buildings. Text reads: “12: Responsible consumption and production”; illustration of and infinity sign with an arrow. Text reads: “13: Climate action”; illustration of an eye with the earth as the pupil. Text reads “14: Life below water”; illustration of a fish under water. Text reads: “15: Life on land”; illustration of a tree and three birds. Text reads: “16: Peace, justice and strong institutions”; illustration of a dove holding an olive branch while standing on a gavel. Text reads: “17: Partnerships for the goals”; illustration of five interlocking circles forming a flower shape.

 

Investors seeking more competitive returns may find them in industries, technologies and companies developing new products aligned with SDGs. Market opportunities in areas such as food and agriculture, smart cities, energy and materials, and health and well-being continue to grow.

Opportunities could include investing in companies developing new technologies to reduce energy use in buildings, sensors enabling doctors to monitor patients remotely to address medical conditions before they become a problem or technologies that help reduce food waste by getting produce to market faster.  The urgency to deliver on the SDGs has only been increased by the coronavirus pandemic, with several governments recognizing that the SDGs can act as a guide to the global response.3

Such opportunities are sure to expand in the months and years ahead. According to the U.N., achieving all 17 will require between $5 trillion and $7 trillion a year4 — a level that traditional sources such as government funding or nonprofit grants won’t be able to meet. Yet, considering the global equities market reached $95 trillion in 20205, private investment, combined with the SDG blueprint, could put success within reach. Says VanderBrug, “People very much believe in the power of capitalism to make a difference."

Businesses working for a better world

Achieving the United Nations Sustainable Development Goals will require active participation by private companies. For its part, Bank of America is committed to developing innovative financing for SDGs. For example, in 2021 the bank announced a $1 trillion environmental business goal, achievable by 2030, to help accelerate the transition to a low-carbon economy.

Find more information about how Bank of America is helping to address the United Nations’ Sustainable Development Goals here.

A private wealth advisor can help you get started.

Our advisors can help you follow your passions, build a legacy and have a positive impact on others.

United Nations Economic and Social Council, “Special Edition: Progress Towards the Sustainable Development Goals,” Report of the Secretary-General, May 2019.

Global Impact Investing Network, Annual Impact Investor Survey 2020.

Principles for Responsible Investment, “Investing with SDG Outcomes: A Five-Part Framework,” June 15, 2020.

United Nations Development Programme, “Impact investment to Close the SDG Funding Gap,” July 2017.

CNBC, Yun Li, “Global Stock Market Value Rises to a Record $95 Trillion This Week on Vaccine Hope,” November 12, 2020.

Important Disclosures

Opinions are as of the date of this article 07/17/21 and are subject to change.

The Chief Investment Office (CIO) provides thought leadership on wealth management, investment strategy and global markets; portfolio management solutions; due diligence; and solutions oversight and data analytics. CIO viewpoints are developed for Bank of America Private Bank, a division of Bank of America, N.A., (“Bank of America”) and Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S” or “Merrill”), a registered broker-dealer, registered investment adviser and a wholly owned subsidiary of Bank of America Corporation (“BofA Corp.").

Impact investing and/or Environmental, Social and Governance (ESG) managers may take into consideration factors beyond traditional financial information to select securities, which could result in relative investment performance deviating from other strategies or broad market benchmarks, depending on whether such sectors or investments are in or out of favor in the market. Further, ESG strategies may rely on certain values based criteria to eliminate exposures found in similar strategies or broad market benchmarks, which could also result in relative investment performance deviating.

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