PI Partnership – Candriam
SUSTAINABLE BONDS – AN INSTRUMENT FOR IMPACTFUL CHANGE
Fawzy Salarbux is global head of consultant relations at Candriam
In the first 10 years of their existence, sustainable bonds have grown from a small, niche area to a rapidly expanding market. As market participants strive towards transitioning to a greener economy, sustainable bonds can provide a valuable source of finance for environmental and social projects, as well as help companies improve their sustainability credentials. By placing project objectives at their heart, sustainable bonds effectively move the focus of responsible investors from issu- ers towards the actual environmental/social impact that their proceeds are expected to make.
This innovative area of fixed income has enjoyed a healthy organic growth (see chart), a trend we believe is set to acceler- ate given the growth potential within fixed income markets; today, they make up only 3% of the total fixed income universe. Additionally, pension funds are expected to play an increasingly important role in driving demand of these fixed income instruments.
Issuance of sustainable and sustainability-linked (SLBs) bonds
1200 1000 800 600 400 200 0
2016 Green Social 2017 2018 Sustainability 2019 2020 2021 Sustainability Linked Bonds Source: Candriam, Bloomberg as at 15/12/202; Candriam’s expectations for 2022 2022
Bonds with impactful objectives
In contrast to being merely a lending transaction, sustainable bonds offer investors and issuers with opportunity and respon- sibility to: – Evaluate the project(s) financed by the bond – Track the use of bond proceeds – Assess bond proceeds’ overall impact through the entire life cycle of the project
22 June 2022 portfolio institutional roundtable: Sustainable debt
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