12/8/2015 TheSeriousBusinessofSavingthePlanet

The Serious Business of Saving the Planet

This growing movement is addressing environmental woes, helping corporations become better
citizens and providing wide-ranging investment opportunities. Heres how you can get involved.

A California winemaker came up with an ingenious way to shrink its carbon footprint: Use lighter bottles to
reduce the weight of every case it ships. The company now burns less fuel distributing its merlots and
chardonnays, cutting greenhouse gas emissions by an estimated 3,000 tons annuallythe equivalent of taking
573 cars off the road for a year.

Meanwhile, one of the world's biggest retailers has announced that it intends to power all of its stores with
renewable energy sources by 2020. As part of the initiative, the company contracted with several large solar
companies to install systems at 400 of its U.S. facilities. Already, after just a few years, the retailer reports that
it has saved $5 million in energy costs.

What might once have been a couple of unusual stories about companies with big hearts look today like
examples of an American and global business phenomenon. Companies of all sizes, all around the world, are
taking bolder steps to make their practices more sustainable. That means reducing the negative impact of their
processesfrom the raw materials and energy they consume, to the communities they operate in, to the waste
they create.

"Traditionally, people have associated sustainability with

https://www.ml.com/articles/theseriousbusinessofsavingtheplanet.html 1/9
12/8/2015 TheSeriousBusinessofSavingthePlanet
"Traditionally, people have associated sustainability with
environmental issues, says Bonnie Benhayon, global environmental
"A sustainable business
business development executive at Bank of America. But a
model is much broader
sustainable business model is much broader than just making
than just making
responsible use of natural resources and protecting the environment.
responsible use of
Increasingly, says Benhayon, firms are also talking about the
natural resources and
sustainability of their business practices: Does the company respect
protecting the
its workforce? Operate efficiently? Act as a responsible citizen, both
environment."
locally and around the globe?
Bonnie Benhayon,
This sustainability revolution isn't happening just because these global environmental
companies have started to care about the environment and society. business development,
It's also happening because sustainability, as many of these Bank of America
businesses are discovering, can be profitableespecially as increased
efficiency and better resource management pay off over the long
term. And this, in turn, is contributing to the rising popularity of so-called impact investing, which allows
investors to pursue growth even as they help to make the world a better place.

Today, in fact, nearly half of all investors are taking sustainability and related issues into consideration, says
Surya Kolluri, managing director for Policy and Market Planning at Bank of America Merrill Lynch. Clients have
expressed an interest in impact investing, he says. Industry research shows there is a big market for it, and in
recent years, performance has historically been strong. All of that makes for very attractive investment
opportunities."

Below are a few areas where we believe the sustainability revolution is set to make a real impact.

Efficiency Is Helping to Fuel the Future

One of the biggest, and oldest, resource challenges across all sectors of industry has been dependence on fossil
fuels. Current patterns of energy consumption aren't likely to be sustainable, and one important solution is
simply to make better use of what we have. "Energy efficiency is absolutely key to controlling growing demand,"
says Sarbjit Nahal, head of thematic investing at BofA Merrill Lynch Global Research. He notes that, despite
great improvements in fuel-efficient cars and energy saving appliances, "around two-thirds of the economic
potential of improving energy efficiency remains untapped." (For more on this topic, see "Solving the Energy
Challenge.")

Innovation could play a big role here. "Smart" electrical grids,

for example, reduce energy consumption by offering utilities
real-time data on power usage, which allows them to fine-
tune distribution and increase efficiency. The U.S. Department
of Energy estimates that 65 million smart meters will be
installed in homes and businesses by the end of 2015,
accounting for one-third of all electricity customers.

Similar technology will help drive more sustainable energy use

across many industries, Nahal believes. For example, fuel
https://www.ml.com/articles/theseriousbusinessofsavingtheplanet.html 2/9
12/8/2015 TheSeriousBusinessofSavingthePlanet
across many industries, Nahal believes. For example, fuel
accounts for about one-third of airlines' operating costs.
Sensors added to jet engines can deliver vital data that helps
the airlines increase fuel efficiency, and Nahal estimates that
each 1% improvement could translate into industry savings of
$30 billion over 15 years.

Yet as much as conservation can achieve, any plan for sustainable

energy also needs to involve alternative, renewable sources. In the
"Around two-thirds of
U.S., the number of installed solar panels that convert the sun's rays
the economic potential
into electricity increased by 418% between 2010 and 2014, according
of improving energy
to the U.S. Energy Information Administration. That increase came
efficiency remains
about, in large part, because "solar is getting more and more cost-
untapped."
effective," says Krish Sankar, semiconductor capital equipment &
alternative energy analyst at BofA Merrill Lynch Global Research. A Sarbjit Nahal,
drop in materials costs for solar panels has coincided with a rise in head of thematic
rates for conventionally generated electricity, meaning that in many investing, BofA Merrill
parts of the U.S., solar-generated electricity is now cheaper per Lynch Global Research
kilowatt-hour than electricity purchased from a utility.

What to Do About Water and Waste?

Among the most pressing sustainability challenges is water. Some 768 million people worldwide lack clean
drinking water, and the problem is getting worse. And while available water shrinks, waste is expected to double
between 2005 and 2025, and double again by 2050. The market for companies addressing the world's water
problems could top $1 trillion by 2020, Nahal estimates, while waste management could become a $2 trillion
business.

Short-term solutions, Nahal says, will focus on existing technologies that can be more widely applied. For
https://www.ml.com/articles/theseriousbusinessofsavingtheplanet.html 3/9
12/8/2015 TheSeriousBusinessofSavingthePlanet
Short-term solutions, Nahal says, will focus on existing technologies that can be more widely applied. For
example, China recently spent $66 billion to upgrade pipes and water-treatment plants to deliver clean drinking
water to more of its citizens.1 Next, the country will need to clean up its water sources (nearly half of which are
polluted) and increase water recycling. (To learn more about how companies, governments and investors are
tackling the worlds water problems, read "The Coming Water CrisisAnd What We Can Do to Solve It.")

Similarly, today's technologies offer potential to turn "trash to cash," according to Nahal. While three-quarters of
all global waste is sent to landfills, some countries are changing that equation. Denmark, for example, buries only
4% of its refuse. Of the remainder, 42% is recycled and 54% is converted into energy. Although challenges
remain in developing environmentally friendly methods to make that conversion, "waste-to-energy is going to be
an evolving area," says Nahal, who notes that one ton of waste can produce up to 750 kilowatt-hours of power.

Creating More Equitable Communities

But sustainability is about more than environmental concerns such as energy use, water and waste. "More and
more companies are beginning to realize that they need to think about giving back and creating a more equal
playing field in the societies in which they operate," says Arif Naqvi, group chief executive of the Abraaj Group, a
leading private equity investor. "Sustainable capitalism" is a corporate ethos his firm aims to build into the
companies it acquires. "In order to be a great company, you have to be doing things the right way," Naqvi says,
and that means focusing on governance, transparency, hiring women, doing things that are transformative in the
workplace and doing them safely. "While our overriding ambition is to deliver economic returns to our investors,
companies that are better in all of these ways tend to deliver better profits." (To hear more from Naqvi, watch
our video, "How Sustainable Capitalism is Creating a Better World.")

There is growing evidence to support that idea. A 2014 Gallup survey found that business units employing a
balanced mix of women and men increase their net profits by an average of 19% percent compared with
businesses that have traditional, male-dominated workforces.2

Transcript of Video

https://www.ml.com/articles/theseriousbusinessofsavingtheplanet.html 4/9
12/8/2015 TheSeriousBusinessofSavingthePlanet

Companies can do well by doing right, says Arif Naqvi with the Abraaj Group, a leading private equity investor.
And that means shareholders, employees and local communities could all benefit.

Or consider the maker of a popular brand of yogurt. After implementing a companywide sustainability program,
which included teaching employees how to conserve water and adopting eco-friendly packaging, it achieved
cost savings of more than $24 million over six years. The firm also reconfigured its supply chain to increase
profit margins for banana farmers in Costa Ricawhich will help the communities that are so integral to the
creation of its product.

Different Approaches for Different Investors

One of the advantages of emphasizing sustainability is that it may let investors contribute to solving global
problems while also focusing on industries that make products in great demandin effect, "doing well by doing
good."

Thanks to the growing interest in impact investing in general, the

universe of mutual funds and other products created around these
"People take all of these
themes is expanding. Some investors also take a more activist
things for granted: 'Air
approach, joining with other shareholders to effect changes at the
is free. Water is free.
companies in which they hold substantial amounts of stock.
Spend it, use it all you
"Companies aren't necessarily going to listen to one investor," says
want.' That's a huge
Fiona Reynolds, managing director of the United Nationssupported
mistake."
Principles for Responsible Investment (PRI) Initiative, which has more
than 1,370 signatories around the worldincluding Bank of America Henry Kravis,
all of which have committed to considering environmental, social co-founder, KKR
and governance issues when making investment decisions.
"Companies find it harder to ignore a coalition of investors
representing trillions of dollars, which is why it makes sense for investors to work together to try and effect
change."

Is the sustainability revolution itself sustainable, or could it simply be a passing fad? While it may have
emerged only recently as a broad concern across the business landscape, sustainability is unlikely to fade away
anytime soonin part because of the urgency of the issues at stake. "I know now that you have to pay a lot of
attention to this.People take all of these things for granted:'Air is free. Water is free. Spend it, use it all you
want,'"reflects the legendary investor Henry Kravis, co-founder of KKR, one of the world's top investment firms.
"That's a huge mistake, because if you do that, what you're going to find is that it isn't going to be there when
you need it."

3 Questions to Ask Your Advisor

1. How can I add "sustainable" investments to my portfolio?
https://www.ml.com/articles/theseriousbusinessofsavingtheplanet.html 5/9
12/8/2015 TheSeriousBusinessofSavingthePlanet

2. What investment choices focus on energy efficiency?

3. Could investments in waste or water treatment fit my goals?

1"Public health: A sustainable plan for Chinas drinking water," Nature, July 30, 2014. http://www.nature.com/news/public-health-a-sustainable-
plan-for-china-s-drinking-water-1.15619

2"The Bottom-Line Impact of Gender Diversity and Engagement," Business Journal, Gallup, January 20, 2014.
http://www.gallup.com/businessjournal/166220/business-benefits-gender-diversity.aspx

The material presented in this article is based on information obtained by BofA Merrill Lynch Global Research as of July 2015.

Energy and natural resources stocks have been volatile. They may be affected by rising interest rates and inflation and can also be affected by
factors such as natural events (for example, earthquakes or fires) and international politics.Impact investing is a new and evolving investment
opportunity which may involve a high degree of risk.

Any information presented in connection with BofA Merrill Lynch Global Research is general in nature and is not intended to provide personal
investment advice. The information does not take into account the specific investment objectives, financial situation and particular needs of any
specific person who may receive it. Investors should understand that statements regarding future prospects may not be realized.

Bank of America Merrill Lynch is a marketing name for the Retirement Services business of Bank of America Corporation ("BofA Corp."). Banking
activities may be performed by wholly owned banking affiliates of BofA Corp., including Bank of America, N.A., member FDIC. Brokerage services
may be performed by wholly owned brokerage affiliates of BofA Corp., including Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S"), a
registered broker-dealer and member SIPC.

https://www.ml.com/articles/theseriousbusinessofsavingtheplanet.html 6/9
12/8/2015 TheSeriousBusinessofSavingthePlanet

Share:

The right advisor for you

With over 14,000 financial advisors
nationwide, find one who fits your
needs.

Find a financial advisor

Related content:

The Coming Water Crisis...

And What We Can Do to
Solve It

Solving the Energy Challenge

INFORMATION FOR:

Corporations & Institutions

Job Seekers
Media & Journalists
Shareholders

https://www.ml.com/articles/theseriousbusinessofsavingtheplanet.html 7/9
12/8/2015 TheSeriousBusinessofSavingthePlanet

DISCOVER MERRILL LYNCH:

About Us
Working With Us
Our Solutions
Research & Insights
Merrill Lynch Social Media

CONNECT WITH US:

Contact Us

SOCIAL MEDIA:

SITE MAP

PRIVACY & SECURITY

LEGAL INFORMATION

MLPF&S FINANCIAL

Investing in securities involves risks, and there is always the potential of losing money when you invest in securities.
Neither Merrill Lynch nor any of its affiliates or financial advisors provide legal, tax or accounting advice. You should consult your legal and/or tax
advisors before making any financial decisions.
Asset allocation, diversification and rebalancing do not ensure a profit or protect against loss in declining markets.
Investment products, insurance and annuity products:

Are Not FDIC Insured

Are Not Bank Guaranteed

May Lose Value

Are Not Deposits

Are Not Insured by Any Federal Government Agency

Are Not a Condition to Any Banking Service or Activity

Merrill Lynch makes available products and services offered by Merrill Lynch, Pierce, Fenner & Smith, Incorporated (MLPF&S), a registered broker-dealer and Member
Securities Investor Protection Corporation (SIPC), and other subsidiaries of Bank of America Corporation. Insurance and annuity products are offered through Merrill
Lynch Life Agency Inc., a licensed insurance agency and wholly owned subsidiary of Bank of America Corporation.
Trust and fiduciary services are provided by U.S. Trust, a division of Bank of America, N.A., Member FDIC, or U.S. Trust Company of Delaware. Both are wholly owned
subsidiaries of Bank of America Corporation.
Banking products are provided by Bank of America, N.A. and affiliated banks, Members FDIC and wholly owned subsidiaries of Bank of America Corporation.
MLPF&S and U.S. Trust make available investment products sponsored, managed, distributed or provided by companies that are affiliates of Bank of America Corporation or
in which Bank of America Corporation has a substantial economic interest.

https://www.ml.com/articles/theseriousbusinessofsavingtheplanet.html 8/9
12/8/2015 TheSeriousBusinessofSavingthePlanet
2015 BankofAmerica Corporation. All rights reserved.
ARLN73CY-EXP-2016-08-27

https://www.ml.com/articles/theseriousbusinessofsavingtheplanet.html 9/9