Green bonds issuance near triples in Q1
Issuance of green bonds almost tripled to $111 billion in the first quarter, compared to the same period a year ago, as investors seek alignment with climate-risk and environmental solutions, according to Calvert Research and Management.
Calvert’s fixed income portfolio manager, Brian S. Ellis, and ESG research associate, Henry Mason, said the pandemic heightened the awareness of environmental, social and governance (ESG) factors as drivers of social responsibility and impact as well as financial performance, turning 2020 into a pivotal year for responsible investing, especially in fixed income.
“Curbing climate change is the top reason that national governments issue green, social and sustainability (GSS) bonds, according to the Climate Bonds Initiative (CBI). Those sovereign issuers have also served as catalysts for corporate and institutional issuers, according to green bond analysts.
“From public pension plans to banks to endowment funds, we are seeing ever-greater institutional interest and mandates for sustainable and green investment,” Ellis said.
“The asset growth in green bonds is a factor in their attraction. With overall green issuance now approaching the size of high-yield offerings, green bonds are recently offering greater liquidity and diversification opportunities — a major concern for institutional investors.”
At the same time, institutional investors were looking for deep, proprietary worked behind green bond offerings as well as measurement and reporting of impact metrics, in particularly consultants and banks who had dedicated sustainability teams to help evaluate the ESG profiles of issuers and securities.
Calvert said that as green bonds were newer to the industry, and developing metrics is a younger work in progress.
“We continue to be selective in independently evaluating the structure of green bonds and the overall issuer profile across sectors, industries and countries to identify the most attractive securities for our portfolios,” Ellis noted.
“Importantly, across our green bond strategies, we seek issuers with strategic environmental goals that are aligned with the green debt they are issuing.
AUTHOR
Oksana Patron
Recommended for you
Lonsec and SQM Research have highlighted manager selection as a crucial risk for financial advisers when it comes to private market investments, particularly due to the clear performance dispersion.
Macquarie Asset Management has indicated its desire to commit the fast-growing wealth business in Australia by divesting part of its public investment business to Japanese investment bank Nomura.
Australia’s “sophisticated” financial services industry is a magnet for offshore fund managers, according to a global firm.
The latest Morningstar asset manager survey believes ETF providers are likely to retain the market share they have gained from active managers.
