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 trillionfootnote1 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 trillionfootnote2 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.”
