I was honored to join with His Royal Highness The Prince of Wales at Davos in January 2020, when he launched the Sustainable Markets Initiative. Since then, we have convened a series of roundtables with CEOs and other leaders from multiple industries to create a framework for us to work together and take tangible steps toward the low-carbon, clean energy future we all want.
Our work has begun with a small group of companies that already are making progress, including such measures as carbon-neutrality commitments in their own operations. Our objective is to expand our efforts to include other like-minded companies and keep advancing the work.
At Bank of America we like to ask the question; what would you like the power to do?
what would you like the power to do?
Our core job is to ask this question of our teammates, our clients, our shareholders and the communities we serve. By listening to the answers, we learn what is most important to them. And then we try to help them do it.
- Our clients want the best capabilities, services and ideas to help them live their financial lives.
- Our employees want to be able to bring their authentic selves to work and to create a good life for themselves and their families with competitive compensation and benefits.
- Our shareholders want the best returns on their investment in Bank of America.
By driving Responsible Growth, we deliver for these stakeholders.
Serving Broader Society
At the same time, we also serve broader society. We must tackle important societal priorities, such as a clean energy future, affordable housing, and economic mobility. And we are. There is a lot of discussion today about the best ways to mobilize the resources needed to address these challenges. The discussion includes questions about how effective our capitalist economic system is at prioritizing these needs and whether we need to think differently about it. Simply stated: Can capitalism address the most challenging societal priorities, or might we need to think about another economic model? In 2019, the Business Roundtable in the U.S. issued a Statement on the Purpose of a Corporation. Bank of America is a member of the Business Roundtable, and I signed the statement, because it reflects the way our company has operated for many, many years. The statement is straightforward, and I encourage everyone with an interest in Bank of America to read it.
The Business Roundtable issued its statement in the context of this ongoing discussion about capitalism. In that context, the statement has been interpreted in some quarters as a step away from the important responsibility we have to deliver the best financial returns to our shareholders so that companies can focus on other, “more important” societal priorities.
At Bank of America, we reject that false choice. The simple fact is that at Bank of America, we believe we must continue to deliver great returns AND help drive progress on societal priorities. There is ample evidence to suggest the wisdom of this approach. The BofA Global Research team —ranked number one in the world by Institutional Investor for seven of the last nine years —has published a series of research reports demonstrating that companies that pay close attention to environmental, social and governance (ESG) priorities are much less likely to fail than companies that do not. At Bank of America, we believe capitalism is best at creating opportunity for people to realize their hopes and goals. We believe if we keep aiming capitalism’s power toward the challenges we face, we can make significant progress on society’s most pressing problems.
How do we ensure the opportunities are available to all and that we harness the energy of capitalism to address society’s concerns? These issues can be solved if the private sector is engaged and helping to drive forward. But it has to be done the right way.
Which brings me back to our question.
Sustainable Development Goals
What if we asked the world: “What would you like the power to do?”
The answer might be summed up in what the U.S. and nearly 200 other countries agreed to at a summit in 2015 when they set forth the Sustainable Development Goals (SDGs). The SDGs represent 17 categories of societal priorities that address equality of opportunity… access to clean water…renewable energy…affordable housing…and other priorities, with specific goals to be met. World leaders agreed that these goals are the ones we need to address to build a sustainable future and create opportunity and prosperity for all.
The SDGs are estimated to require about $6 trillion annually of investment capital. This will take all sectors of society. Certainly philanthropy and governments have critical roles to play, but all annual charitable contributions in the world total just over $800 billion. Total global non-profit foundation assets are about $1.5 trillion. Even if annual charitable contributions and every endowment and foundation in the world were directed toward reaching the SDGs and no other priorities - we still would fall far short of what is needed.
Governments alone also cannot address the challenges laid out in the SDGs. The U.S. operating budget is the largest in the world at about $4.5 trillion. If all of it were dedicated to the SDGs only - meaning not funding national security, basic research, basic services for the U.S. taxpayers, and not paying the federal debt - we still would fall short of the annual need.
The private sector and capitalism
So how can we fund these needs? The private sector and capitalism. This goes well beyond corporate philanthropy, as important as that is. Since I became CEO of Bank of America in 2010, we have delivered more than $2 billion in philanthropy to support important priorities in the U.S. and around the world. Our teammates have, with our support, volunteered about 2 million hours of their time each year to non-profit organizations and causes. We are proud of that, but even if every company on the Fortune 500 delivered that amount of philanthropy in a year, we would still have a gap.
What the private sector is doing, and what is reflected in the Business Roundtable statement, is aligning our regular business activities to help solve these challenges.
For Bank of America, that means we have to bring our $2.4 trillion balance sheet to bear to the task.
- We have to bring our $53 billion expense base to the task.
- We have to bring our $268 billion equity base to the task.
- We have to bring our trillions a year of capital raising for our clients to the task.
Based on client desires, we have to usher the $3 trillion in assets in our wealth management business to the task.
If all operating companies continue to align themselves to deliver on those SDGs on which they can have the most impact, and if we measured ourselves to be sure we’re making progress, we would deliver the capital, the creativity and the expertise to address the world’s most pressing challenges.
That is the goal of the Sustainable Markets Initiative: To harness the creativity, the innovation, the balance sheets and the efforts of organizations committed to Stakeholder Capitalism, and alignment to the SDGs, to bring to life the vision of His Royal Highness and the companies in the SMI.
What sets this group apart is the breadth of the membership across many industry sectors, working on common objectives within their groups and common principles across the groups. We seek to bring our intellectual capital to bear to the task of advancing toward a clean energy future, and to operationalize our work through concrete outcomes in our own activities and in the marketplace.
Most importantly, the SMI is the embodiment of the more than four decade vision of His Royal Highness The Prince of Wales to address society’s most pressing concerns, including a rapid transition to net-zero carbon emissions. We have created a framework to provide tangible, actionable pathways for private corporations, government, NGOs, and others to realize this long-standing ambition.