Impact investing is an increasingly compelling consideration for core bond allocations
The market for publicly traded bonds that provide intentional, direct and measurable social and/or environmental impact has evolved significantly. Over the past decade, five themes have supported this, resulting in a deeper and more diverse set of opportunities for investors seeking to incorporate impact goals into their fixed income portfolios.
- Market growth
Estimating the size of the impact bond market is a challenge. Market participants have yet to coalesce around a consensus definition of an impact security. Data providers, however, have generally come to agree on GSS as an acceptable acronym for this market: green, social and sustainable bonds. Issuance of GSS-labelled bonds exceeded $1 trillion for the first time in 2021 and nearly doubled in 2020 and 2021, according to Environmental Finance’s Sustainability Bond Insights 2023. And while 2022 was a challenging year for bond markets generally, and GSS bond issuance declined, the underlying trends for 2022 signal the ongoing maturation of this market. Issuance declined 26% across fixed income markets, yet green-labelled bonds experienced a significantly lower fall of 10%. The sustainable bond market’s share of the outstanding global bond market rose to 13.5%, an increase from 12% in 2021 and 7% in 2020.
You can now read the full ’Sponsored Commentary’ at the link below
Supporting documentsClick link to download and view these files
- PDF, Size 0.67 mb