The roadmap for investing in a sustainable world

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.

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.

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.

To learn more about aligning your investment goals and values, visit our sustainable and impact investing resources page.