Bank of America’s investment businesses announced the launch of a new program that supports clients’ needs to align investments with the environmental, social and governance (ESG) issues they care about.
"One of the most pronounced trends we’ve seen in recent years is the call for wealth to have a productive impact on our environment, our communities, and our society broadly, in addition to earning an investment return," said Andrew Sieg, managing director and head of global wealth and retirement solutions for Bank of America Merrill Lynch. "This program offers opportunities for a wide range of investors with diverse interests and beliefs to help meet this need."
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New offerings for investors on a mission
Together, Merrill Lynch Wealth Management and U.S. Trust now offer more than 180 ESG-themed investments to individual and institutional investors, including mutual funds, exchange traded funds, separately managed accounts, and alternative investments. These offerings are organized around three key themes:
Environmental Stewardship – examining use of water, alternative energy, climate change and clean tech.
Human Capital Practices – including "gender lens" investing (investments focused on improving the lives of women and girls) and faith-based investing.
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By GlobalDataCorporate Governance – focusing on corporate transparency, disclosure, reporting and incentives.
Chris Wolfe, chief investment officer of Merrill Lynch Wealth Management’s private banking and investment group, notes that investors are rapidly adopting the values-based approach. He notes that values-based investing accounted for US$3.74 trillion, or roughly one in every eight to nine dollars under professional management, citing a study from the Forum for Sustainable and Responsible Investment (US SIF) done in 2012. That is 22% higher than the US$3.1 trillion noted in SIF’s 2010 report. Moreover, values and financial interests are no longer mutually exclusive, Wolfe says. "There is compelling evidence that investing according to one’s principles can generate competitive returns," he notes.
Proprietary strategies from U.S. Trust
In early 2013, U.S. Trust launched a new, proprietary strategy called Environmental Stewardship and Sustainability (E2S) with Jason Baron, portfolio manager. This strategy identifies thoughtful stewards of the environment by assessing energy practices, carbon footprint reduction, and process efficiency.
"In creating this strategy, we responded directly to client demand," said Chris Hyzy, U.S. Trust’s chief investment officer. "We believe that corporations dealing effectively with environmental issues are poised to do well relative to their industry peers."
That followed the launch of "Socially Innovative Investing" (S2I), also managed by Baron. S2I is a proprietary, customizable strategy that allows U.S. Trust and Merrill Lynch Wealth Management clients to deploy a proprietary set of positive investing screens. As of March 2013, the strategy had grown to approximately $600 million in assets.
A new focus at Merrill Edge
Investing according to your values is an approach that can work across a variety of asset levels. For Merrill Edge clients, a new landing page now houses all ESG-related products and services. For self-directed clients who like making their own investment decisions, Merrill Edge identifies socially responsible investing options in its mutual fund and ETF screens.
Proxy voting following Socially Responsible Investing (SRI) Guidelines
In addition to their growing interest in values-based investing, some investors are combining the power of their dollars with the power of their voices, using shareholder advocacy to express their views and vote their shares.
To make this process easier, Merrill Lynch Wealth Management now offers an SRI proxy voting service, at no additional charge, for clients with certain types of accounts. By completing a simple form, these clients can delegate proxy voting authority to a service provider who will vote proxies on their behalf, following SRI Guidelines. SRI Guidelines reflect a broad consensus of the socially conscious investing community and help to assess environmental, social and governance risks.
Thought leadership from Bank of America
To build these and other ESG solutions, Bank of America taps into the extensive thought leadership of its ESG Council, created in 2012 and comprised of a broad range of experts and leaders throughout the organization, including Wolfe and Hyzy.
The council also includes Sarbjit Nahal, BofA Merrill Lynch Global Research’s director of Thematic Investing, who has led the industry’s No. 1 ESG team for the third year in a row, as ranked by Institutional Investor magazine. His team recently published papers on a wide range of related megatrends, including water, obesity, safety, extreme weather, and energy efficiency, and has also developed ESG screening tools on CO2, geographic risk and the ESG Consensus.
An environmental business commitment from Bank of America
In 2013, Bank of America Corporation launched a new US$50 billion environmental business commitment to address climate change and demands on natural resources and to help advance lower-carbon economic solutions.
Over the next 10 years, the company will drive no less than US$50 billion of business that consists primarily of lending, equipment finance, capital markets and advisory activity, carbon finance, and advice and investment solutions in areas including energy efficiency, renewable energy, transportation, water and waste, as well as US$100 million in grants and program-related investments to nonprofit organizations, community development financial institutions and other NGOs promoting low-carbon and resource conservation solutions.
This follows the company’s original US$20 billion commitment which was completed four years ahead of schedule at the end of 2012.
