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Strengthening the bond of equality and sustainability

Innovative ESG securities help to empower historically marginalized communities while supporting a healthy environment

The ongoing health crisis has amplified racial disparities that have long existed in communities across the country. Yet, while governments, nonprofits and the private sector have moved to address the health and social issues stemming from the pandemic, the world’s most challenging issues — including economic mobility, climate change and affordable housing — have not lessened. If anything, the coronavirus has heightened the need to find solutions that can help alleviate our world’s environmental and social issues simultaneously.

While public entities and nonprofits are taking many steps to address such challenges, innovations by the financial services industry in the bond market are opening up new sources of capital aimed at funding education, housing and health care solutions, among other critical social and environmental issues.

A catalyst for sustainability

One such solution: Bank of America’s Equality Progress Sustainability bonds. These first-of-their-kind bond issuances address social and environmental issues concurrently. Critically, they are designed to reduce inequalities for historically marginalized populations by focusing on financing and investments that provide people of color or women with expanded access to essential services, such as affordable housing and business capital. The two issuances, totaling $4 billion, support financing for:

  • Mortgage lending for single-family homes and lending/investing for multifamily 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 businesses owned or operated by historically marginalized communities and funds that invest in like businesses

At the same time, the Equality Progress Sustainability bonds will fund environmental sustainability projects such as renewable energy generation, electric vehicle production, sustainable water and wastewater management, green buildings and carbon capture. It’s a solution that recognizes the interrelated nature of global issues, and it has the potential to significantly increase the amount of capital available to solve those issues.

The scale of funding needed

Focused on helping to achieve the United Nations’ Sustainable Development Goals (SDGs), the Equality Progress Sustainability bonds refine bank efforts started more than a decade ago. With nearly $12 billion in environmental, social and governance (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 2020 was the first dedicated to addressing a global pandemic. The success of these offerings helped shape the Equality Progress Sustainability Bond issuances.

Perhaps more important, such issuances are paving the way for the world’s huge capital pools — pension and retirement funds, personal wealth managers and others representing as much as $100 trillion — to invest in similar initiatives.

“These bonds show 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 these bonds to the socioeconomic empowerment of historically marginalized communities.”

These bonds show how sustainable finance can connect issuers and investors to deploy more capital for important societal issues.
Karen Fang  |  head of Global Sustainable Finance at Bank of America
Karen Fang

Karen Fang, head of Global Sustainable Finance at Bank of America

According to Fang, Bank of America’s financing, investing, underwriting and advisory activities will play key roles in the collective efforts of the private and public sectors to meet the U.N.’s SDGs. Such efforts are just one part of Bank of America’s strategy to support progress on social and environmental issues through investment, philanthropy and responsible business operations. For example, the bank’s ESG-themed issuance framework aligns ESG leadership and the company’s sustainable finance strategy, which aims to mobilize and scale capital deployment to help advance the U.N.’s SDGs.

Learn more about Bank of America’s commitment to advance the U.N.’s SDGs 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.

01/11/2021