Strengthening the Bond of Equality and Sustainability

A new ESG security helps empower Black and Hispanic-Latino communities while supporting a healthy environment

The coronavirus has amplified racial disparities that have long existed in in communities across the country. Yet, while governments, nonprofits and the private sector moved to help address the health and social issues stemming from the pandemic, the world’s most challenging issues--including economic mobility, climate change and food insecurity--did not lessen. To be sure, the virus did more to amplify the need to find solutions that can address our world’s environmental and social issues simultaneously.

Many steps are being taken to address such issues, including innovations in the bond market which are opening up new sources of capital aimed at funding education, housing and healthcare solutions, among other critical social and environmental issues. In fact, sustainability-minded bonds have the power to unlock and mobilize capital at a scale necessary to drive meaningful global change.

A catalyst for sustainable solutions
Since 2012, more than $1.2 trillion1 has been raised through social and green bonds—environmental, social and governance (ESG) themed investments focused on providing economic opportunity to underserved communities and supporting environmental sustainability, among other goals., 2020 has shown that there is more work to be done to address social issues—such as inequality, affordable housing and equal access to education—which are disproportionately affecting Black and Hispanic-Latino communities. According to the United Nations (UN), an additional $2.5 to $3 trillion2 per year is needed to fund solutions to the world’s toughest social and environmental challenges. Existing financing approaches, while laudable, must be reimagined if they are to raise the capital required.

One such solution: Bank of America’s $2 billion Equality Progress Sustainability bond. The first-of-its-kind bond addresses social and environmental issues concurrently. Critically, it’s designed to reduce inequalities for Black and Hispanic-Latino communities in the U.S. through financing that includes:

  • Mortgage lending for single family homes and lending/investing for multi-family affordable housing projects in these communities
  • Financing to create and expand medical services in these communities
  • Supply chain finance loans focused on minority-owned businesses
  • Long term deposits and equity investments in Black and Hispanic-Latino Minority Depository Institutions that are also Community Development Financial Institutions
  • Equity investments in Black and Hispanic-Latino owned or operated businesses and funds that invest in Black and Hispanic-Latino owned businesses

At the same time, the Equality Progress and Sustainability bond will fund environmental sustainability projects such as renewable energy generation and electric vehicle production. It’s a solution that recognizes the interrelated nature of global issues, and it has the potential significantly increases the amount of capital available to solve them. “Our communities and the environment are inextricably linked,” says Anne Finucane, vice chairman at Bank of America, who leads the company’s ESG, sustainable finance, capital deployment and public policy efforts. “We care deeply about both, and Bank of America will continue to design innovative solutions for investors who want to address society’s most important challenges.”

The scale of funding needed
Focused on helping to achieve the UN’s Sustainable Development Goals (SDGs), the Equality Progress Sustainability bond refines the bank’s efforts started more than a decade ago. With nearly $10 billion in ESG bond issuances, Bank of America has funded renewable energy facilities, low- and moderate-income housing projects and more. The $1 billion COVID-19 Social Bond the bank issued in May, 2020, was the first bond dedicated to addressing a global pandemic. The success of these offerings helped shape the Equality Progress Sustainability Bond.

“By leveraging our collective expertise, capabilities and networks, the private sector, including companies and investors, can support progress toward social inclusion and environmental sustainability,” says Tom Montag, chief operating officer, global banking and markets, at Bank of America. “This sustainability bond does just that.”

This is just the beginning. A sustainability-focused approach will make it easier for the world’s huge capital pools—pension & retirement funds, personal wealth managers and others representing as much as $100 trillion—to invest in similar initiatives.

“This bond shows how sustainable finance can connect issuers and investors to deploy more capital for important societal issues, such as climate change and racial and gender equality,” says Karen Fang, head of Global Sustainable Finance at Bank of America. “We are dedicating the social side of the proceeds of this bond to the socio-economic empowerment of Black and Hispanic-Latino communities.”

This bond shows how Sustainable Finance can connect issuers and investors to deploy more capital for important societal issues.

Karen Fang
Managing director and head of Global Sustainable Finance at Bank of America

 

According to Fang, the impact and scale that Bank of America’s financing, investing, underwriting and advisory activities will play a key role in the collective efforts of both the private and public sectors to meet the United Nation’s Sustainable Development Goals.

A more inclusive approach
In this new framework, social progress, environmental sustainability and real returns for investors are not mutually exclusive. “Our focus on sustainable finance is one of the ways we drive responsible growth,” notes Finucane. “By addressing these critically important issues through ESG-themed securities, we are offering a way for investors to be part of social and environmental change, and drive solutions through capital markets.”

Such efforts are just one part of Bank of America’s strategy to support progress through investment, philanthropy and responsible business operations. Learn more about Bank of America’s commitment to advance the UN’s Sustainable Development Goals and address some of the world’s toughest challenges through its global business strategy, work with partners, support of employees and efforts to make its operations sustainable.

a $10 billion commitment

The eight ESG-related bonds Bank of America has issued to support the racial equality, environment and healthcare are already having an impact.

2020 $2 billion equality progress sustainability bond

First bond of its kind supports racial equality & economic opportunity in Black & Hispanic-Latino communities + environmental sustainability projects.

2020 $1 billion social bond

Raises funds for companies testing, diagnosing and treating the coronavirus. including nonprofit hospitals and skilled nursing facilities.

2019 $500 million social bond

The first social bond by a U.S. bank has helped build and preserve affordable housing, including 2,436 units for low-to-moderate income families.

2019 $2 billion green bond

The funded renewable energy projects are keeping 2.9 million metric tons of greenhouse gases from being emitted annually.

2018 $2.25 billion green bond

The financed wind ventures alone are cutting greenhouse gas emissions by 2.6 million metric tons a year.

2016 $1 billion green bond

Major solar and wind projects financed by this bond are producing enough clean, renewable energy to power 300,000-plus homes.

2015 $600 million green bond

Financed energy conservation projects, such as lighting upgrades, are saving 4,800 megawatts of electricity a year.

2013 $600 million green bond

Bank of America's first ESG bond funded various projects, including LED streetlights now saving Oakland, California $1.5 million a year.


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