Lombard Odier Investment Managers has launched a Global Climate Bond investment strategy as part of a strategic partnership with fixed income manager Affirmative Investment Management.
The LO Funds–Global Climate Bond fund is an investment grade portfolio targeting a higher than average yield while mitigating some of the effects of climate change.
Climate bonds are issued by governments, corporations and other borrowers to finance projects designed to mitigate or adapt to climate change and its effects.
The fund will invest in renewable energy, resource efficiency, land management, water resources, physical infrastructure and the marine environment, as well as “under-funded areas”, such as climate change adaption and developing countries.
Carolina Minio-Paluello, global head of sales and solutions at Lombard Odier IM, says: “The increased size and dynamism of the green bond market goes a long way to improving how impactful investors can be. The new fund enables our investors to mobilise their capital with a clear understanding of how their assets will be deployed, while generating the same returns for the same risk as a conventional bond portfolio.”
Stephen Fitzgerald, co-founder and chairman of AIM said: “Transparency is a key consideration for investors in the rapidly growing climate bond market, where guidelines around issuance can still appear vague or arbitrary, with no single standard for qualifying projects as being environmentally sound. Expert selection is therefore crucial to ensure investors have a more comprehensive coverage of the full labelled and climate-aligned universe.”
Climate bonds are debts issued by governments, supranational entities, municipalities, corporations and other borrowers to finance activities and projects designed to help the world mitigate or adapt to climate change and its effects. They include “labelled” green bonds, a market with defined use-of-proceeds that has grown by 159% year on year since 2013, as well as “climate-aligned”, social and sustainability bonds that are deemed to help in the fight against climate change and support the United Nation’s 2015 Sustainable Development Goals.