Sustainable and Impact Investing

Invest in the momentum of a changing world with investments that incorporate sustainability analysis alongside traditional financial analysis

The world is rapidly progressing. Technological innovation across nearly every industry is transforming the way we live and do business. It’s also presenting potential investment opportunities with those companies leading on the innovation front that are well positioned to grow.

We offer a wide range of sustainable investments that incorporate sustainability analysis alongside traditional financial analysis and can also help you align your investments to your personal sustainability and impact preferences while pursuing competitive returns.

Take advantage of new opportunities as technology transforms our world

The world is evolving faster than ever before. Look at economic drivers — most industries are going through some type of transformation. Energy, healthcare, education, transportation, agriculture… the list goes on. If your portfolio is not taking this transformation into account with sustainable strategies, you could be missing out on real opportunities.

Sustainability analysis helps you evaluate potential risks while seeking competitive returns

By combining Environmental, Social and Governance (ESG) analyses with traditional financial and investment analysis, investors can discover new opportunities, better manage risk and align their investments with their preferences while pursuing competitive returns. Supporting evidence shows that, from 2005 to 2015, companies with poor ESG scores accounted for 90% of bankruptcies in the S&P 500® — indicating the role ESG plays in potentially mitigating risk and improving returns.1

Our Chief Investment Office due diligence process

The same investment standards as traditional investments, along with a second screen, are applied to sustainable investments to ensure the competitiveness of the strategy and depth of ESG integration.

  • Quantitative review: We look at historical performance and risk compared to the market for an unbiased, numbers-based evaluation of each investment manager.
  • Qualitative review: We go beyond numbers to look at investment manager credentials, investment processes and risk management approaches with the goal of identifying the best-in-class practitioners.
  • Rigorous governance & oversight: A final, ongoing evaluation is conducted by multiple oversight committees — helping identify the highest-conviction strategies to offer our clients.

Certain research has shown that sustainable investments that incorporate ESG data have offered competitive performance.

74% of sustainable funds as reported by Morningstar rank in the top two quartiles in their respective category, in terms of performance over a five-year period.2

5.53% vs. 5.48% From 2020-2022, returns for the MSCI World ESG Leaders Index gained 5.53% annually, while the MSCI World Index returned 5.48% annually.3

Top-quintile ESG improvers outperformed the Bloomberg U.S. 3000 Index by 3.0% annualized, while decliners underperformed by -0.8% annualized in analysis.4

Past performance is no guarantee of future results.

Aligning your portfolio to your personal preferences to create positive change

Sustainable and impact investing allows you to align your investments to your personal preferences. By looking across three broad categories — People, Planet and Principles of Governance — we can help you choose investing strategies that drive positive change in the world.

Bank of America’s commitment to responsible growth

As one of the world’s largest financial institutions, we take a key role in building a more resilient future. Through our strategy of responsible growth, we are deploying capital towards a more sustainable economy — helping to create jobs, develop communities, foster economic mobility and address society’s biggest challenges around the world.

Connect with a Merrill Private Wealth Advisor.

Frequently asked questions

ESG stands for environmental, social and governance, and refers to commonly reported practices that companies and investment managers use to measure corporate sustainability. Investment strategies that incorporate ESG analysis along with traditional financial analysis are using more data to inform investment decisions. This can help you better manage risks — and avoid investing in companies with unsustainable business models or declining profitability due to these risks.


While there are many possible definitions, Bank of America defines sustainable and impact investing as: “Investments that target competitive financial returns and seek positive social and environmental effects.” Other common terms include socially responsible investing (SRI); environmental, social and governance (ESG) investing; and values-based investing (VBI). While they have some distinctions, they may share common elements of applying exclusionary screens, leveraging ESG strategies and driving solutions that make a positive impact on society or the environment.


Sustainable and impact investing practices can be used with a wide range of investments, that include:

  • Managed Strategies, such as mutual funds, thematic exchange-traded funds and separately managed accounts
  • Alternative Investments, such as sustainable private investments available for qualified investors
  • Sustainable Model Portfolios, such as portfolios that are developed to implement sustainable strategies or are comprised only of sustainable managed strategies
  • Customized Solutions, such as SMAs and customized ESG solutions through third-party asset managers
  • Capital Markets Solutions, such as green bonds, sustainability bonds, social impact bonds, Closed-End Funds and Unit Investment Trusts


The main benefit of sustainable and impact investing is giving you the ability to evaluate potential risks while seeking competitive returns in your portfolio. It can also help you take advantage of new opportunities as technology transforms our world. And these strategies can help you align your portfolio to your personal preferences to create positive change.

No. Modern sustainable and impact investments are designed to deliver competitive performance and appropriate levels of risk compared to traditional investments. Investment managers use ESG data from companies and data providers to review investments and seek out those with strong ESG characteristics. Companies that incorporate material ESG factors into their decision-making have the potential to deliver competitive returns over the long term — because they’re focused on creating lasting value and are aware of the interest of a broad range of stakeholders.


No. Philanthropy or charitable giving is the act of giving money with no expectation for any return. Sustainable investing is investing that seeks to deliver both positive social and environmental effects while targeting competitive financial returns. Sustainable and impact investing is actually a powerful mechanism for creating meaningful change in society since it offers a mechanism for the markets to deploy and reinvest capital with purpose, thus creating the potential to scale and magnify the social and environmental impact.


Related Solutions

1 BofA Global Research, “ESG 2.0: 10 FAQs from Clients,” June 11, 2021.

Morningstar, “Sustainable Funds U.S. Landscape Report: Funds Five-Year Trailing Performance Across Equities and Fixed Income by Morningstar Category Quartile,” January 31, 2022. Percentage is based off of 153 funds, 14 funds ranked in the top two quartiles in their respective category.

Bloomberg, 5-year returns for the MSCI World ESG Leaders Index gained 7.06% annually, while the MSCI World Index returned 6.71% annually (12/31/2017-12/31/2022). 7-year returns for the MSCI World ESG Leaders Index gained 9.18% annually, while the MSCI World Index returned 9.12% annually (12/31/2015-12/31/2022). Note: These are annualized returns over the respective time periods. 

ESG Improvers: An Alpha Enhancing Factor,” 2020.

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, Member SIPC and a wholly owned subsidiary of Bank of America Corporation (“BofA Corp.”). 

Alternative investments are intended for qualified investors only. Alternative investments such as derivatives, hedge funds, private equity funds, and funds of funds can result in higher return potential but also higher loss potential. Changes in economic conditions or other circumstances may adversely affect your investments. Before you invest in alternative investments, you should consider your overall financial situation, how much money you have to invest, your need for liquidity and your tolerance for risk. Alternative investments are speculative and involve a high degree of risk.

There are many factors to take into consideration when building an investment portfolio and it's important to remember Environmental, Social and Governance (ESG) factors are only one component to potentially consider and should always be used alongside fundamental analysis.

Sustainable and 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.

Risk management and due diligence processes seek to mitigate, but cannot eliminate risk, nor do they imply low risk.

Related insights

  • Emerging opportunities to help build a more sustainable world

  • Sustainable and Impact Investing: More than just a feel-good approach

  • Progress and optimism