According to Bill Bovingdon, Chief Investment Officer of Altius Asset Management, people of all ages care not only about returns, but also about the sustainability and social impact of their investments.
“Environmental awareness and concern about the impact of climate change has never been greater and extreme weather events such as the recent floods and before that horrific bushfires have compelled even normally disengaged people to sit down and take notice,” he said.
“Furthermore, the pandemic has also highlighted our fragility (society and economy) in the face of natural events that disrupt our ecosystems, our labor markets, our supply chains and the individual health and financial stability of all citizens – which we mostly took for granted until recently.”
With all of this in mind, one of the big questions for investors is what are the big trends in sustainable investing globally. Interestingly, the FinancialTimes recently outlined the eight essential environmental, social and governance (ESG) topics for 2022 and one of his surest predictions was that ESG-related or green bonds would further establish themselves as a pillar of the universe fixed income securities.
For Bovingdon, fixed rate portfolios geared towards ESG objectives such as the United Nations Sustainable Development Goals produce a direct and perceptible impact for investors.
“Green bonds directly finance projects such as affordable housing, housing for people with disabilities, renewable energy and energy efficiency projects, clean transportation projects, drinking water and wastewater management.
“Sustainability Bonds can drive decarbonization programs such as the deployment of renewable electricity in the retail division of Wesfarmers (Bunnings, Kmart Group and Officeworks) and the reduction of CO2 emissions intensity of their chemical, energy and fertilizer businesses,” Bovingdon said.
Ethical Investment Advisers Director Louise Edkins says her clients appreciate that investing in an ESG-focused fixed-rate investment provides an additional bonus to investors’ capital as part of the solution for the planet.
Specifically, she argues that ESG funds perform as well, and in many cases better than standard funds, because they address their environmental, social and governance risks more diligently.
“Furthermore, they are also invested in the disruptions and opportunities in current markets that can deliver outperformance,” says Edkins, who is also co-founder of the $500m Australian ESG pioneer.
Commenting on Altius’ fixed income offering, she says bonds are the global debt instrument and have an important role to play in raising capital, especially as governments and industries go to zero net emission.
“Green bonds and sustainability bonds focus capital towards decarbonizing the world,” she says.
“In addition, our clients are increasingly concerned about social housing and housing affordability and investing in bonds that address affordable housing is an important theme for our clients, which is why we love Altius funds. ESG.”
“Fund managers like Altius are involved in the wholesale bond market and have the understanding and research to seek out the most sustainable, socially positive and financially attractive bond choices, as well as how to take advantage of the macro view of bond markets in their investment decisions.
Bovingdon says Altius is a leader and pioneer in sustainable bond investing in Australia. This recalls the fund’s roots as part of Australian Unity – the country’s first member-owned welfare society, established in 1840.
One of Australia’s oldest businesses, Australian Unity was built on concern for long-term sustainability and the well-being of the wider community.
Altius’ funds, including Altius Sustainable Bond Fund, Sustainable Short-Term Income Fund and Green Bond Fund, are in each case the first of their kind in Australia and are all managed according to Altius’ sustainable investing philosophy.
Importantly for investors, the funds have all been successful in delivering competitive returns, as well as adhering to high standards of risk management and ESG impact, “particularly our use of green and sustainable bonds that directly contribute to a better outcome for society by targeting specific SDGs”. .
“This approach has been recognized by our industry with best-in-class sustainability ratings and awards from industry bodies and research houses,” Bovingdon said.
Edkins agrees, and regarding Atlius’ continued appeal to investors, she says fixed income investments help reduce volatility and market risk in a portfolio.
“The increase in green bonds around the world is a positive development that will help countries and companies move towards net zero, which bodes well for the next five years and beyond,” he said. she declared.
Bovingdon says the pace of ESG awareness is accelerating and “in the next few years it would not be surprising if an accredited sustainability and emissions reduction plan were as mandatory as audited financial statements for companies. borrowers wishing to access the capital markets”.
“We would also expect to see greater demand for pure or ‘real impact’ products, where the investor is equally concerned about the ability to assess the delivery of the promised results of their investments, as they are concerned about the return provided,” he said. .