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The do-good investor

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You know that certain actions—like volunteering or buying locally—can help the environment or improve society. But did you know that investing can as well?

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What is social impact investing?

Making investments to help generate social and environmental impact and financial returns too.

Ways to invest for the greater good

Find the right balance between your desire for financial gains and making an impact.

Impact first
Involves looking for economic or market-based investment strategies to address social or environmental problems.

Thematic
Investors search for investment opportunities that focus on environmental or social themes.

Sustainable
Involves proactively investing in companies that are dedicated to environmental, social or governance factors.

Socially responsible
Investors screen out investments they disagree with, for instance, casinos or firearms companies.

Who invests this way?

Growing numbers of investors—especially younger ones—are interested in impact investing. They are putting their money behind the causes they care about.

22%
of Baby Boomers

31%
of Generation X

57%
of Millennials

Source: 2016 U.S. Trust survey of investors

How to find investments with social impact

“Paying close attention to companies’ environmental, social and governance practices can help investors spot weaknesses before they appear on a balance sheet.”
—  Anna Snider, head of Due Diligence & Co-Chair of GWIM Impact Investing Council, Merrill Lynch Wealth Management

4 out of 5 companies in the S&P 500 produce reports on corporate social responsibility.
Source: Report on US Sustainable, Responsible and Impact Investing Trends, 2016

Many investment firms offer social impact investing. Read more about this approach (Link: https://www.merrilledge.com/guidance/what-is-impact-investing) and investment choices available at Merrill Edge. 

Is it possible to make money while making a difference? 

Companies that have led on climate change had an 18% higher return on equity over a decade, compared with peers. 

Source: CDP Climate Change Report, 2014

“In the very near future, the words ‘impact investing’ will just be ‘investing.’” 
—Chris Hyzy, chief investment officer for Bank of America Global Wealth & Investment Management

 

Past performance does not guarantee future results.

  • In this report, industry leaders are referred to as S&P 500 companies with 2014 CDP disclosure scores and/or CDP performance bands that rank in the first quartile versus peers by GICS Industry Group, where:
    Q1 = first quartile (top 25% of responding companies by industry group);
    Q2 = second quartile;
    Q3 = third quartile;
    Q4 = fourth quartile (bottom 25% of responding companies by industry group); and Non-responders include: declined to participate; no response; provided information but did not answer questionnaire to CDP in 2014.
  • Return on Equity (ROE) = net income less preferred dividends, divided by average total common equity (three-year average, 2011–2013).
  • Analysis in this report is based on the 337 company responses received by the deadline of June 28, 2014. The response rate of 70% (348 companies) is based on time of printing. 
 
Disclaimer
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The material provided on this website is for informational use only and is not intended for financial or investment advice. Bank of America and/or its affiliates, and Khan Academy, assume no liability for any loss or damage resulting from one’s reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own financial professional when making decisions regarding your financial or investment options.

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The risk/potential reward spectrum is intended to provide a general evaluation of the risk and potential return across the impact investment spectrum. It is not meant to predict future performance or the volatility of any investment option or category. Investors should carefully consider the investment objectives, risks, charges and expenses before investing.

Investing involves risk, including loss of principal.

Merrill Edge is available through Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPF&S), and consists of the Merrill Edge Advisory Center (investment guidance) and self-directed online investing.

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