In this Thematic Investing video, three of our experts discuss our approach to sustainability-related investing in fixed income markets.
Alex Bernardt, Global Head of Sustainability Research, notes thematic bond funds can invest in solutions that either facilitate the energy transition, help restore and sustainably manage our ecosystems, or address issues around basic services. He highlights our proprietary sustainability research and our frameworks to assess green, social and sustainable bonds.
Arnaud-Guilhem Lamy, Head of Euro Aggregate Bond Strategies, dives into ‘use-of-proceeds bonds’ that help finance projects with positive environmental outcomes such as clean transportation, ‘greening’ buildings and efficient wastewater management. He stresses the importance of analysing the issuer and the project carefully to prevent greenwashing.
Jean-Charles Sambor, Head of Emerging Market Fixed Income, turns the focus to the ‘sustainable cities in Asia’ theme, the effects of urbanisation and the contribution that investing in bonds targeting issues around basic infrastructure, urban mobility and social housing can make. “From a total return perspective, the potential is really great,” he argues.
Please note that articles may contain technical language. For this reason, they may not be suitable for readers without professional investment experience. Any views expressed here are those of the author as of the date of publication, are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may take different investment decisions for different clients. This document does not constitute investment advice. The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial outlay. Past performance is no guarantee for future returns. Investing in emerging markets, or specialised or restricted sectors is likely to be subject to a higher-than-average volatility due to a high degree of concentration, greater uncertainty because less information is available, there is less liquidity or due to greater sensitivity to changes in market conditions (social, political and economic conditions). Some emerging markets offer less security than the majority of international developed markets. For this reason, services for portfolio transactions, liquidation and conservation on behalf of funds invested in emerging markets may carry greater risk.
Environmental, social and governance (ESG) investment risk: The lack of common or harmonised definitions and labels integrating ESG and sustainability criteria at EU level may result in different approaches by managers when setting ESG objectives. This also means that it may be difficult to compare strategies integrating ESG and sustainability criteria to the extent that the selection and weightings applied to select investments may be based on metrics that may share the same name but have different underlying meanings. In evaluating a security based on the ESG and sustainability criteria, the Investment Manager may also use data sources provided by external ESG research providers. Given the evolving nature of ESG, these data sources may for the time being be incomplete, inaccurate or unavailable. Applying responsible business conduct standards in the investment process may lead to the exclusion of securities of certain issuers. Consequently, (the Sub-Fund's) performance may at times be better or worse than the performance of relatable funds that do not apply such standards.