Invest in transition
How we invest
in carbon transition
Alignment is a process
Transparency builds credibility
Financial objectives
are important
Our carbon transition approach is driven by five core beliefs.
Any financial cost to becoming more sustainable should either be insignificant or compensated by better risk-adjusted returns.
Traditional risk metrics, such as volatility, value at risk, and tracking error are still important alongside sustainability considerations.
No portfolio can be fully aligned to all sustainable objectives in one day.
We favour the gradual alignment of portfolios over time through turnover, natural cashflows (bonds maturing or client flows) and engagement.
Clear and detailed reporting is essential for a sustainable fixed income strategy. No single measure captures ‘sustainability’ and so we have developed a dashboard of different data to keep clients informed.
It is vital to invest in sectors that are the most important for the necessary environmental and social transitions.
Failing to do so limits access to relative value opportunities, reduces diversification and can prevent us from financing transitioning companies.
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The goal of engagement is to help issuers become more resilient to the impacts of environmental and social changes. We also engage with industry bodies, data providers and our own clients to help create a broader and more attractive investment universe.
Engage at all levels