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.
Think about the growth potential of…
A manufacturer of life-science tools and molecular diagnostic equipment with products that help improve disease diagnosis and treatment, drug development, and access to affordable, high-quality healthcare.
Think about the growth potential of…
An agricultural equipment manufacturer creating products that connect owners, operators, dealers and consultants, so, farmers can be closer to their data — improving their yields and resource management.
Think about the growth potential of…
An education technology company with a platform working to democratize access to the technology industry for young professionals with different backgrounds by offering intensive job training to diverse populations.
Think about the growth potential of…
A real estate company that manages residential units with the goal of expanding its energy efficient modernizations, senior friendly conversions and construction of affordable housing.
Sustainability analysis helps you evaluate potential risks while seeking competitive returns
By combining sustainability analyses with traditional financial and investment analysis, investors can discover new opportunities, better manage risk and pursue competitive financial returns while aligning their investments with their preferences. Supporting evidence shows that, major ESG-related controversies (including data breaches) have wiped out $600bn+ of S&P 500 market cap since 2013 - indicating the role ESG plays in potentially mitigating risk and improving returns.1
Our Chief Investment Office due diligence process
For sustainable investing strategies, we apply the same investment standards that we use for traditional strategies and then apply a second set of standards to ensure the strategy also meets our sustainability criteria, including the ability to measure and report on impact results or sustainable goals.
- 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 sustainability data have offered competitive performance.
60% 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
8.51% vs. 7.83% Over the last 3 years, returns for the MSCI World ESG Leaders Index gained 8.51% annually, while the MSCI World Index gained 7.83% annually.3
Companies in the highest quintiles for MSCI ESG Ratings for the MSCI ACWI Index have consistently outperformed those companies in the lowest quintile over the last decade.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.
People
Commitment to engaged and healthy workers and sustainable communities
Empowerment and inclusion
- Pay and promote fairly
- Create inclusive workforces at all levels
- Drive increased standards of living for employees, including policies such as basic maternity leave and healthcare
- Encourage innovations to support the best of employee care
Sustainable communities
- Development of, and access to, affordable real estate
- Avoiding human and civil rights controversies
Planet
Contributions to climate and environmental sustainability
Energy transition
- Renewable energy usage
- Revenue from products/services that reduce pollution and/or energy use
- Carbon emissions
Natural resources
- Avoiding natural resource controversies
- Total water consumption
- Avoiding water management controversies
Principles of Governance
Commitment to corporate ethics and societal benefit
Corporate governance
- Board independence
- Avoiding bribery and fraud controversies
Corporate behavior
- Avoiding product safety controversies
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
1 Source: Factset, BofA U.S. Equity & Quant Strategy, “Includes 35 major controversies related to data breaches, accounting scandals, customer safety, sexual harassment and other ESG topics. January 2023.
2 Source: Morningstar, "ESG Funds Recover, but Still Trail Conventional Peers by a Small Margin" Feb. 5, 2024. Percentage is based off 308 total funds, with 182 funds ranked in the top two quartiles of their respective category.
3 Bloomberg, 5-year returns for the MSCI World ESG Leaders Index gained 13.84% annually, while the MSCI World Index returned 13.41% annually (12/31/2018-12/29/2023). 7-year returns for the MSCI World ESG Leaders Index gained 11.63% annually, while the MSCI World Index returned 11.33% annually (12/30/2016-12/29/2023). Note: These are annualized returns over the respective time periods.
4 Source: MSCI, “MSCI ESG Ratings in Global Equity Markets: A Long Term Performance Review” March 2024. Data from Dec. 31, 2012 - Dec. 29, 2023.
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.