In emerging markets, a new HSBC AM bonds fund aims to have a positive ESG impact.
With initial funding of $50 million from the Finnish pension insurance company Varma, the Global Emerging Markets Corporate Sustainable Bond fund will address challenges such as climate change and socioeconomic inequality, as well as improve access to clean water and healthcare for underserved populations.
The SDFR Article 9 offering would invest in fixed income such as bonds and other securities issued by EM enterprises that contribute to the Sustainable Development Goals of the United Nations (SDGs). The 17 Sustainable Development Goals (SDGs), which include efforts to end poverty, avert wars, and achieve gender equality, were formed in 2015, and several have a target date of 2030.
The new fund will be led by HSBC AM's head of global EM debt, Luther Bryan Carter, along with senior portfolio managers Caroline Keany and Julius Obeso.
Carter said: "Emerging markets are at the epicentre of sustainable investing, a just transition and Paris Agreement alignment."
As investors, we believe that consistent and direct engagement with developing market issuers can provide opportunity to evaluate their ESG strategies and progress.
"It will help them tackle their challenges and gaps – and help drive positive change".
HSBC AM intends to collaborate closely with bond issuers whose sustainability objectives line with its own.
This strategy, according to the global asset manager, will provide a "high conviction, low turnover portfolio that aspires to ensure solid sustainability criteria in emerging economies."
It states that investment in companies that fall short of their stated sustainability goals would be restricted.
Petri Ala-Harkonen, director of fixed income, currencies, and commodities at Varma, stated, "The fund's investment strategy complements our emerging markets portfolio from a diversification perspective, given that it is mostly made up of government bonds."
"It invests in corporate bonds and takes careful consideration of the related sustainability aspects, and therefore deepens the consideration of sustainability as part of our emerging market investments".
By fLEXI tEAM