Continuing the commitment to solve global challenges

Though the specific timeline remains unclear, society will eventually adjust to and recover from the healthcare and humanitarian crisis, and move forward on addressing many of the economic and racial equality issues that the coronavirus has intensified. Yet questions remain: what type of world will we emerge into? And what will we have learned?

While it feels as though the pandemic has put the world on hold, ongoing challenges such as energy access, water and sanitation access, climate resiliency and others outlined in the United Nations (UN) 17 Sustainable Development Goals (SDGs) are likely only to intensify. When the virus forces 1.6 billion children to stay home from school, the ability to continue to provide education is at greater risk, the UN warns.^footnote1 In addition, solutions to these issues must be developed to also address the ongoing impact on people and communities of color.

“No one can be fully prepared for something like this,” says Anne Finucane, vice chairman, Bank of America. Still, previous events such as the 2008 financial crisis provided “dress rehearsals for this moment,” she says. As the biggest global social challenge—the “S” in environmental, social and governance (ESG) writ large—that public, private and nonprofit entities have faced in several generations, the pandemic presents an opportunity to refine the collaborative approach needed to address the world’s toughest challenges.

Governments, philanthropy, and private businesses must work together as never before to tackle the coronavirus, the SDGs, and escalating racial and social equality issues, Finucane believes. Companies, in particular, must renew and strengthen their commitment to stakeholder capitalism—serving the interests of employees and communities in addition to shareholders, and operating according to ESG principles.

Meeting the immediate challenge

As governments provide trillions of dollars of economic stimulus and push for vaccines and treatments, nonprofits have reinvented their services in real time to address new and unforeseen needs. Businesses, too, have been called upon to act quickly and decisively, protecting employees’ safety and financial health and providing aid to communities affected by the coronavirus. “We must work together as a global community to address this health and humanitarian crisis,” says Brian Moynihan, chairman and chief executive officer of Bank of America. “And we must support conversations that can advance economic and social progress.”

Businesses are lending support in variety of ways, from direct aid to neighborhood nonprofits providing needed medical services, to creating forbearance policies that ease the economic pressures stemming from increased unemployment. Behind all of these efforts, however, is the understanding that businesses must look to the health of the communities they serve as well as their shareholders and clients to be truly successful.

In the aftermath of events such as the 2008 recession, many companies spent years deepening their commitment to stakeholder capitalism—supporting success for employees and communities, alongside financial performance. This commitment helped them respond to the rapid disruption caused by the coronavirus. For example, Bank of America’s decision to have no coronavirus-related layoffs in 2020 is a natural extension of existing policies such as a $20 minimum wage and 16 weeks paid paternal (maternity, paternity and adoption) leave. Building on its extensive philanthropic support and leadership in CDFI lending and green bonds, the Bank was able to pivot quickly, with:

• $100 million in virus-related grants for communities
• $250 million to support community development financial institutions (CDFIs)
• $1 billion social bond to aid coronavirus relief efforts—the first of its kind from a U.S. commercial bank
• $1.25 billion commitment over five years to address economic and racial inequality in local communities
  
  

Staying focused on global needs

While such initiatives specifically target the coronavirus, they are driven by a broader commitment to ESG principles guided by the SDGs, Finucane says. For example, “The need to mobilize and deploy capital to address climate change has never been more urgent.”

Or consider the challenge of global poverty—steadily dropping for decades but now at risk of rising. According to the UN, a 20% decline in global income in the wake of the virus could result in 548 million people entering poverty.^footnote2 Another SDG—providing clean water and sanitation for all people—gains even greater urgency at a time when basics like hand washing and simple hygiene are essential to slowing the pandemic.

Government and nonprofits can’t solve problems of this scale alone. Business and private investors have the expertise and the responsibility to help. The U.N.’s Global Investors for Sustainable Development represents 30 of the world’s largest financial institutions, sharing ideas on how to bring global investment capital to bear on world challenges. Innovative approaches such as blended finance use seed capital from nonprofit or commercial banks to help remove risks for other investors, which can increase the amount of funding available for projects aimed at the SDGs.

Individual companies need better and more accurate ways to demonstrate their own progress toward advancing the SDGs, however. To that end, the World Economic Forum’s International Business Council, with Moynihan as current chair, is collaborating with leading accounting firms to establish common metrics and disclosures that companies and their stakeholders can use to assess their commitment to environmental, social and governance practices.

Building back, better

Such efforts are not driven purely out of altruism, but also out of a sense of shared responsibility—and opportunity. BofA Global Research suggests that companies with strong ESG records may be more resilient through coronavirus-related market volatility.

For example, based on aggregated client flow data, clients pulled about $8.2 billion out of equity ETFs when the S&P 500 index went from a record high in late February to bear-market territory just four weeks later.^footnote3 Through that same period, ESG funds tracked by BofA Global Research^footnote4 actually continued to attract inflows, suggesting that ESG fund managers were less pressured to sell stocks with strong ESG characteristics. “During the recent downturn, you saw that investments with good social metrics or social scores tended to be more stable than those without,” notes Savita Subramanian, Head of ESG Research, BofA Global Research. “This supports our view that ESG isn’t a bull market luxury, it’s a bear market necessity.”

As with global society, businesses will emerge from the coronavirus fundamentally changed—and facing challenges that will require even greater resources and preparation. Bank of America has joined the Sustainable Markets Initiative, led by His Royal Highness the Prince of Wales, with Brian Moynihan serving as co-chair. Bank of America also serves on the Vatican Council on Inclusive Capitalism to help industries rethink their practices according to more sustainable models—contributing to their own prosperity while contributing to solutions to the SDGs.

“We will all take away valuable lessons from this crisis,” Moynihan says. “Fighting the coronavirus has required us to continue to put our ESG principles into action.” Businesses can help lead the way, continuing and even expanding their commitment to ESG principles and a more sustainable world, he adds. “In the midst of this, there is opportunity for the world to gain confidence in the effectiveness of global cooperation in overcoming our greatest challenges.”

Learn more about Bank of America’s commitment to collaborating on and innovating solutions for some of the world’s most pressing issues, including poverty, climate change and access to healthcare.

Originally published 09/01/2020