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Sustainable and Impact Investing

Pursue positive change. Seek competitive returns.

More companies are changing the way they do business. They're examining not only their profit potential but also how their practices impact the environment and society at large.

 

Sustainable and impact investing offers you the opportunity to invest in companies that are working towards better ways of doing business with innovative approaches to support their long term performance.

 

Help to solve society’s biggest and growing challenges. Live out your beliefs. Invest to reflect issues that matter to you while pursuing your investment goals.

It’s easy to start

A flexible approach and multiple investment options make it easy for you to start investing for sustainability and impact. We can help you adjust your existing portfolio, add a single solution, or choose a new model portfolio.

 

Choose the impact approaches you prefer through our A-B-C framework.

  • Avoid

    Seeks to reduce negative social or environmental effects and manage risk by limiting certain exposures

     

  • Benefit

    Seeks to support positive social or environmental practices and enhance potential for long-term competitive financial returns

     

  • Contribute

    Seeks to advance positive, measurable social or environmental outcomes
    and target opportunities
    where impact is intrinsic to
    financial performance1

Your Merrill advisor helps to ensure your sustainable and impact investing strategy reflects your risk tolerances, time horizons, and preferences through actionable planning and objective advice.

What you care about matters

Every investor has unique motivations for choosing to invest for sustainability and impact. In addition to seeking financial performance, you may want to:

 

  • Invest in companies with responsible environmental and social practices
  • Align your portfolio with your values or goals
  • Support specific issues or causes you care about
  • Target innovations that help solve social or environmental challenges

Your Merrill advisor can help customize your sustainable investing strategy based on your preferences and motivations. We can also review your current portfolio to help you become aware of what you currently own and find potential opportunities to align your investments with your sustainability-driven goals.

 

Regardless of how much you direct toward sustainable strategies, your investments can make a difference because you're part of a larger group of sustainable investors helping to drive meaningful change. Your portfolio can contribute towards responsible business practices and lead companies to be more environmentally and socially responsible.

The case for sustainable investing

  • $20 trillion is expected to flow into sustainable investments over the next two decades.1
  • Firms with good or improving environmental, social, or governance (ESG) characteristics have been shown to perform as well as—and may even outperform—their peers.2
  • Companies that are ranked higher by ESG data providers have generally seen lower future earnings volatility.3
  • Nearly two dozen emerging markets offer approximately $23 trillion in climate-related investment opportunities.4
  • As volatility increased and markets took a downward turn in early 2020, stocks with high (top quintile) ESG ratings* outperformed the market from the S&P 500 peak on February 19 to March 23 by over 5%.5
  • While performance results have varied over time, companies with better scores on board diversity and management diversity saw consistently higher future return on equities than counterparts with lower scores.6

Make better informed investment decisions

Some investors worry that creating positive impact with their portfolio means giving up returns. However, sustainable and impact investing may often offer competitive performance and appropriate levels of risk compared to traditional investments.

 

Companies that incorporate environmental, social and governance (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. Their practices may even help mitigate the impact of risks beyond their control, like droughts, high energy costs, or labor unrest.

 

Sustainable and impact investments at Merrill undergo assessments by our Chief Investment Office for the quality and competitiveness of the investment strategy as well as analysis of the intentionality and depth of environmental, social and governance (ESG) integration.

Your portfolio's impact

Monitoring progress is an important part of sustainable and impact investing. We add an extra layer of analysis to review investments using environmental, social, and governance metrics. We view impact using a framework of four pillars, allowing us to look across industries and to provide consistent but evolving perspective.

 

  • People

    Commitment to engaged and healthy workers

     

    Good Health & Wellbeing
    Health solutions and services


    Empowerment & Inclusion
    Diversity policies and progress; Labor rights

  • Planet

    Contributions to climate and environmental sustainability

     

    Climate Action
    Alternative energy and resource efficiency; Carbon emissions


    Natural Resources
    Management of natural resources and water use

  • Principles of Governance

    Commitment to ethics and societal benefit

     

    Corporate Governance
    Board composition; Adherence to ethical practices


    Corporate Behavior
    Product safety

  • Prosperity

    Contributions to equitable, innovative economic growth and sustainable communities

     

    Employment & Economic Vitality
    Access to finance; Employment opportunity


    Sustainable Communities
    Affordable real estate; Human rights

 

Please note that the examples under each theme are illustrative of the types of investments possible, and are not necessarily strategies available today. Investment strategies with a local or targeted market focus may be limited.

 

What are we doing as a company?

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.

 

Learn more about what we’re doing to foster sustainability and have a positive impact.

 

Sustainable Investing Strategies

Managed Strategies7

Mutual funds, thematic exchange-traded funds and separately managed accounts (SMAs)

 

Alternative Investments7

Sustainable private investments available for qualified investors

 

CIO Sustainable Total Portfolios7

CIO portfolios implementing sustainable strategies

 

Customized Solutions7

SMAs and customized ESG solutions through third-party asset managers

 

Capital Markets Solutions7,8

Green bonds, sustainability bonds and social impact bonds

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Whether you’re defining goals, addressing change or figuring out how to move forward, Merrill and Bank of America offer a wide range of solutions to help you take the next step and stay on track.

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Our financial advisors are committed to putting your investing needs and priorities first. Here’s how you can get started with an advisor:

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BofA Global Research, “ESG Matters – US: Top 10 reasons you should care about ESG,” September 2019.

Hermes Investment Management, ESG investing: A Social Uprising, 2018.

BofA Global Research, ESG Matters – US: Top 10 reasons you should care about ESG, September 2019.

Governance & Accountability Institute, Inc., 2019.

5 BofA Global Research, “ESG Matters: Bull Market Phenomenon? Quite the Contrary,” March 25, 2020.

BofA Global Research, “Thematic Investing: The She-conomy,” March 6, 2019.

7 Capability offered by Merrill Lynch, Pierce, Fenner & Smith Incorporated.

8 Capability offered by Bank of America, N.A. and its bank affiliates.

 

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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