It is my honor to serve as a Guardian on the Vatican’s Council for Inclusive Capitalism (VCIC), under the leadership of His Holiness Pope Francis. The business leaders who have come together for this work understand the important role that Inclusive Capitalism — Stakeholder Capitalism as others call it — is playing to address the world’s most important priorities.
The work is timely. People around the world are asking the question, “How can capitalism work better for society?” These questions reflect concerns over the need for greater progress in many areas:
- Concerns that capitalism isn’t sharing its rewards equitably with all members of society;
- Concerns that capitalism is failing to provide the same level of economic mobility and opportunity for all races and genders; and
- Concerns that capitalism is not addressing climate change, or perhaps exacerbating the problem.
Responding to these concerns, His Holiness has called for “an economic system that is fair, trustworthy and capable of addressing the most profound challenges facing humanity and our planet.”
That is the purpose and promise of Inclusive Capitalism.
The critical role of the private sector
The idea that business can help create long-term sustainable value for all stakeholders goes back to 1973 with the original Davos Manifesto.
In 2019, the Business Roundtable in the U.S. issued a Statement on the Purpose of a Corporation reinforcing this principle and noting companies have a “fundamental commitment to all stakeholders.” Bank of America is a member of the Business Roundtable. I signed the statement because it reflects the way our company has operated for many, many years.
At Bank of America we are focused on driving Responsible Growth: We have to grow, by serving our clients and managing risk well. And the idea of Inclusive — or Stakeholder — Capitalism is core to how we ensure our growth is sustainable:
- Operational excellence, so that we can remain efficient and reinvest savings into our people, our capabilities;
- Being a great place to work for our teammates; and
- Sharing our success in the communities we serve around the world.
In practice this means every day we work to deliver for all of our stakeholders: our clients, our employees, our communities, and our shareholders. At the same time, we are focused on creating positive change on societal priorities that affect each of us. This includes our work to support the health and safety of our people and communities, promote racial equality and economic opportunity, and address climate change and help drive the transition to a low-carbon future.
These commitments are complementary with the commitments we have to our shareholders. We must deliver great shareholder returns AND help drive progress on global priorities. We embrace our dual responsibility to drive both profits AND purpose.
There’s growing evidence supporting 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. And ESG commitments by a company can translate into a better brand, more client favorability, and a better place for our teammates to work.
Focusing on what matters
But how to best align a company’s commitments to society’s needs? The world prioritized those needs in 2015, when nearly 200 countries agreed to the Sustainable Development Goals (SDGs). The SDGs represent 17 categories of societal priorities that address equality of opportunity, affordable housing, access to clean water, renewable energy, 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 require contributions from, and collaboration between, all sectors of society.
The non-profit sector certainly has a role 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—not the arts, not additional medical causes, not any of the other worthy priorities that get support today—we still would fall far short of what is needed.
Governments also play a key role, but cannot alone address the challenges laid out in the SDGs—especially at a time when government budgets will be focused on managing and rebuilding from the health crisis.
Putting capital to work
How then do we fund the SDGs and advance society’s goals? The answer is the private sector; the answer is capitalism.
This goes well beyond corporate philanthropy, as important as that is. It requires companies aligning their ordinary business activities and operations to help solve these challenges.
At Bank of America, 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 of dollars per year of capital raising for our clients to the task.
What does that mean in practice? For Bank of America, that includes:
- Helping companies raise $40 billion to help their move to carbon neutrality, and operating carbon neutral ourselves (a milestone we achieved this year);
- Leveraging our research and investment advice to meet client demand for ESG products and investing;
- Making a 10-year $300 billion commitment to help finance the transition to a low-carbon, sustainable economy;
- Committing $1 billion to address racial equality and economic opportunity;
- Offering a high minimum starting wage ($20 per hour in the U.S.) and providing strong and progressive benefits to employees; and
- Investing in training and reskilling to help employees grow and advance within our organization.
And we’re just one company. If we align the activities of businesses of every size to society’s most pressing challenges, and aggregate their impact across sectors and regions, Inclusive Capitalism can drive meaningful and lasting progress. Highlighting this ability and shining a light on the unique promise of Inclusive — Stakeholder — Capitalism is the power and the mandate of the Vatican Council. Bank of America is proud to join the other Guardians in this work.
Together, we can harness the power and brilliance of capitalism to create economic growth that is fair, responsible, trusted, dynamic and sustainable.