The recent health crisis amplified racial disparities that have long existed in communities across the country. Yet, while governments, nonprofits and the private sector 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 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 healthcare solutions, among other critical social and environmental issues.
A catalyst for sustainability
One such solution is 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 three issuances, totaling $6 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.
