Demystifying Sustainability-Themed Investing

By Jose Pluto, CFA, Portfolio Manager & Julius Huttunen, Responsible Investment Manager

Responsible investing is one of the most prominent trends within the asset management industry today. Forces such as climate awareness and consumer preferences have contributed to an increased focus on sustainability that spans business, governments and society. The growth in demand for dedicated responsible investment solutions, coupled with the broader shift toward sustainability, has spurred a frenzy of new product launches, including the advent of sustainability-themed fixed income solutions.

Despite the growth, challenges remain. Sustainability-themed strategies may have materially different approaches to defining the sustainability and identifying the investment universe and well as various methods to pursuing sustainability goals. As we've partnered with clients to identify solutions, we encountered a variety of sustainability-themed fixed income strategies with interesting differences and similarities.

In this paper, we present our view of the shifting marketplace and our findings from working with clients to identify and develop sustainable fixed income solutions. The subsequent pages outline what we believe are key considerations that can help institutional investors, asset owners and consultants compare sustainability-themed fixed income strategies.

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