During the 2008 financial crisis, the main sustainability initiatives Corporate and Responsible Investment in the World, the United Nations Global Compact and United Nations Principles for Responsible Investment (PRI), experienced an increase in the number of followers above the average and a notable rebound in the commitment to sustainability.
The same is true of the current coronavirus crisis, which has served to bring to light the weaknesses and strengths of governments to deal with the crisis, shedding light on failures, vulnerabilities and social inequalities. Members of both organizations, the United Nations Global Compact and the United Nations Principles for Responsible Investment (PRI), have redoubled their efforts to promote the innovation, decarbonisation and skills building for better management of ESG factors (Environmental, Social and Governance).
It seems quite logical that both investors and companies react to crisis situations with greater innovative capacity and prioritize measures that increase confidence and increase the chances of a strong economic recovery. In Europe, French and German leaders They are calling for further cooperation and have already expressed their desire to use economic recovery to accelerate transformation, as outlined in the ‘European Green Deal’. Along the same lines, the government recently sent the preliminary draft of the Climate Change Law to the Cortes.
Funds for transformation
One of the vehicles used to finance the effort that this transformation will require is the issuance of green bonds, a type of fixed income security created to finance projects with a positive climate or environmental impact. For the individual investor it can be somewhat difficult to access this type of bondBut they can invest in sustainability through funds that invest in sustainable projects and that include green bonds in their portfolio.
The funds have been selected that, with a five and four star rating from VDOS, also have a MSCI Rating ASG rating of A, AA and AAA. Of this group of funds, the most profitable in the year is CANDRIAM SUSTAINABLE WORLD BONDS with a revaluation of 4.92 percent in its class C capitalization.
In the last annual period, its profitability is 8.40 percent, with a controlled volatility data of 5.48 percent, which places it among the best in its category for this concept, in the fifth quintile. Invests primarily in fixed or variable coupon securities issued in different currencies by both public and private issuers. The companies eligible to be part of the portfolio are the best (top 50%) within each sector in terms of integrating environmental, social and governance challenges.
Regarding public emissions, only the countries best-in-class (top 50%) who optimally manage their human, natural and social capital are represented in the fund. Its largest positions include emissions of Inter-American Development Bank, Inter-American Development Bank, AT&T, Germany and Starbucks. It applies to its participants a fixed commission of 0.60% and a deposit of 0.06%.
Investing in global private debt, BNP PARIBAS SUSTAINABLE GLOBAL CORPORATE BOND It earns 1 percent performance since January in its Capitalization Classic class. After one year, it revalued 6.06%, with a cost for volatility of 11.85%. With a medium-term investment horizon, it invests mainly in bonds of companies from all over the world, with an investment grade rating, which prove to be the best in their sector in terms of sustainable development (social responsibility, environmental and good corporate governance) .
It is actively managed, so you can invest in securities that are not included in the index consisting of 50% of the Bloomberg Barclays US Aggregate Corporate (RI) and 50% of the Bloomberg Barclays Euro Aggregate Corporate (Hedged). Its largest positions include the funds of the manager itself BNPP Inticash USD 1D ST VNAV I C, BNPP GREEN BOND-I C and the emissions of TELEFONICA EMISIONES SAU 1.07 PCT (1.28%) HCA INC 4.50 PCT 15-FEB-2027 (0.96%) and WRKCO INC 4.90 PCT 15-MAR-2029 (0.92%). His fixed commission is 0.75%.
AXA WORLD FUNDS-GLOBAL GREEN BONDS Class A Euro Cap obtains a profitability of 0.02% in the year and 3.14% in the last year, with a fairly controlled volatility data of 6.96 percent, which places it in the second best group in its category for this reason , in quintile four.
Invest in a diversified portfolio of debt securities denominated in any freely convertible currency, investment grade rated and issued by governments and companies around the world. Invests primarily in green bonds through contracts futures contracts Euro Bund Future June 20 (6.76%) Euro Bobl Future June 20 (6.14%) the issuance of the Republic of France (1.75%) and futures contracts on 2-year US Treasury Notes June 20 (5.07 %) and Euro Schatz Future June 20 (3.31%). Its participants bear a fixed commission of 0.75%.
The technological changes, long-term environmental imperatives and changes in social norms will be the drivers of ASG investment and corporate sustainability. They are global trends that seem irreversible and that governments can accelerate or delay, but not stop. The ASG inversion appears to be shaping up to be the new normal.
Paula Mercado is Director of Analysis at VDOS.