As investors look for ways to use their investments to improve people’s lives, municipal bonds offer great potential as effective financing tools for initiating positive change to benefit individuals and their communities, according to Lauren Sepolen, a Senior Fixed Income Analyst at BNY Mellon Wealth Management at a recent conference in New York.
Speaking at the December 7th Financial Times “Investing for Good” conference with The Rockefeller Foundation, Lauren was part of a panel of experts discussing a range of innovative financing. The event provided an educational forum for institutional and individual investors keen to use their assets to address issues, such as climate change or lack of access to healthcare and education, while still generating a financial return.
BNY Mellon Wealth Management was a silver sponsor of the day-long event that brought together nearly two hundred participants from leading foundations, family offices, asset managers, wealth managers, investors, advisors, fund managers, development finance organizations and government agency representatives to discuss the opportunities and challenges for innovative financing for the common good.
As part of a panel focused specifically on new forms of financing available to philanthropists and impact investors, Lauren talked about the use of municipal bonds to address specific issues and how they are evolving structurally to enable communities and investors together to address an array of social, economic and environmental issues.
For example, a growing trend in impact investing is the notion of ‘green’ muni bonds. Remarking that the definition of “Green Muni bonds” as a category is evolving, Lauren noted that currently traditional municipal bonds can also be structured to have the same impact.
Lauren acknowledged that wealth management has seen a pickup in so-called muni green bonds and that they actually dovetail with existing muni bonds. And in fact, BNY Mellon Wealth Management’s income group has been implementing client-driven sustainable muni investing strategies for years. In 2016 the firm formalized guidelines for selecting munis that most effectively provide the greatest social or environmental benefits for their local communities.
When making a tax-exempt muni investment in a university or other nonprofit, Lauren explained, investors can specifically select those issuers that have a formal commitment to energy efficiency or some other ‘green’ initiatives.
For investors who care where their returns are coming from and what their assets are being used to support, investing in this space is an impactful way to align their investment portfolio with their values and mission, she added.
The Financial Times’ U.S. Investment correspondent Stephen Foley moderated the panel, which also included Ommeed Sathe, impact investments director with Newark Investment Fund at Prudential, Tracy Palandjian, co-founder and CEO of Social Finance, and Michael Kubzansky, a partner with the Omidyar Network.