Editorial
SUSTAINABLE DEBT
CONTENTS
P4 : Sustainable debt in figures The market explained in six numbers
Investors and conservationists have found common ground. In March, the World Bank raised $150m (£120m) to help save black rhi- nos in South Africa from extinction. The Wildlife Conservation Bond, known as the “rhino bond”, is quite an innovative product in that the returns are performance related. So, the more black rhinos there are, the more money investors earn.
The rhino bond shows how the debt markets are evolving. There was a time when looking at a bond, investors asked: how much does it pay? And how likely is the issuer to pay it? Now they also want to know what its carbon footprint is. How is it going to protect the planet or improve equality? In short: sustainability is no longer limited to equities. The emergence of bonds specifically labelled green, sustainable, social or blue, has made such investing easier. Yet more than half (57%) of the average institutional investor portfolio in Europe is exposed to the bond markets, according to Mercer. There simply is not enough supply of green labelled bonds to meet demand. Pension schemes and insurers are, therefore, having to look for traditional bonds with positive environmental or social credentials that offer a suitable risk-return profile.
The rhino bond is certainly funding a good cause. Yet it may not be for every pension fund in that there are no potential returns until the bond matures in 2027, but it is a sign of how radical issuers are becoming when it comes to closing the funding gap to build a sus- tainable future.
The following pages of this supplement look at how investors are fac- toring sustainability into their debt portfolios as demand for greener portfolios is growing.
Mark Dunne Editor
m.dunne@portfolio-institutional.co.uk
P5: Participants A who’s who of those taking part in our discussion
P6-23: The discussion A group of pension schemes, an insurer, asset managers and consultants sit down to debate integrating sustainability into debt portfolios
P22-23: Sustainable bonds – An instrument for impactful change Fawzy Salarbux explains how Candriam approaches the expanding sustainable debt market
P24-25: Green bonds: In search of dispersion Rhys Petheram of Jupiter Asset Management examines the investment case for green bonds
P26-29: Feature: Green money A look at how sustainability is influencing the bond markets
June 2022 portfolio institutional roundtable: Sustainable debt
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