green bonds, which will continue to give the market a bad name. Petheram: The green bond market was created to close the financing gap. The point is to get investment into the technol- ogies needed to make this transition. So, when considering paying 100bps or 110bps, the question is: what is the issuer doing from an investment perspective? That is going to become increasingly important. The funding needed to make the transition on climate change is enormous. So, the capital potentially coming to market could be considerable and even out the supply-demand in balance. Forest: Coming back to the point about the greenium, in Euro- pean investment grade it is between 2bps and 5bps. The aver- age spread is close to 130bp, so I do not see the problem of hav- ing such a greenium, depending on the issuer.


Bikos: That is a snapshot in time and markets change. In 2021, the greenium was negative but over the long-term as more issuers enter the market, I expect this to self-correct. Lewis Emmons: This is a great opportunity for active managers. The points made about the challenges of identifying the use of proceeds in the green bond space and understanding and eval- uating KPIs in the sustainability-linked bond space goes to the importance of doing your own analysis, of evaluating manag- ers who not only have access to the raw data but understand how to utilise and apply it. Daniel Loughney: For now, you need a strong research bench to be a good sustainable bond investor. We are looking to set up a fund and on the investment grade side and we will likely bring in external managers to do that research. Trying to square that circle and jump a few years ahead, Europe


June 2022 portfolio institutional roundtable: Sustainable debt 9


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