A growing investment universe
The green, social and sustainable bond markets are growing rapidly and broadening out, enabling issuers to finance sustainable products and investors to build diversified core fixed income portfolios with demonstrable environmental and social impact.
Graph source: HSBC Research. As at 8 March 2024. Multi-lateral means a supranational – such as the EU, the World Bank or the Nordic Investment Bank. A sub-sovereign is based in a single country – cities, municipalities, provinces, regions, etc. ABS = Asset Backed Securities. *ESG-labelled bonds encompass a broad range of bonds which have specific sustainability terms attached. They include, but are not limited to, green, social, sustainable and sustainability-linked bonds. Cards source: International Capital Market Association (ICMA).
Seeking transparency and alpha with the Green Social Sustainable Bond Fund
Avoiding greenwashing and generating alpha in this growing market requires active insight. JPMorgan Funds - Green Social Sustainable Bond Fund leverages an established global research framework and the specialist knowledge of our sustainable investing team to achieve full transparency into underlying projects and to mitigate the ‘greenium’ associated with ESG-labelled bonds.
Every bond in the portfolio is linked to sustainable activities as defined by ICMA and qualifying as sustainable investments under Article 9 EU SFDR.
Financing the transition to a sustainable and inclusive economy
Green Social Sustainable Bond Fund invests in bonds we identify as good investments from a financial perspective, and which can be clearly defined as sustainable, with an explicit link to environmentally and/or socially beneficial projects. Bond proceeds must be sufficiently segregated; financed projects must qualify as sustainable activities as defined by ICMA; and the issuer must have an adequate reporting framework in place.
Green Bond
Case study: Transforming transportation
VOLVO CAR AB (VOVCAB), Sweden
Volvo – European Automotive Manufacturer
- Issuer aims to become a leading premium electric car brand and plans for the full electrification of its new vehicle fleet from 2030 onwards.
- Green projects include those related to the design, development and manufacture of zero emission vehicles, including electric vehicles (EVs).
- Company targets a 40% reduction in its overall emissions intensity by 2025, on the pathway to become a climate neutral and circular business by 2040.
- Access to the European high yield automotive sector without compromising on the investment process.
- Opportunity to engage with the issuer to bring its Green Financing Framework up to the Gold Standard.
Bond Details
- Maturity: October 2027
- S&P credit rating: BB+ (positive)
- Currency: EUR
Analyst sustainability checklist
- Use of proceeds: Clean Transportation
- % of proceeds allocated: At least 75%
- Reporting frequency: Annual
Social Bond
Case study: socio-economic advancement
AFRICAN DEVELOPMENT BANK (AFDB), Supranational
- African Development Bank (AfDB) group is a multi-lateral organisation focused on reducing poverty and improving living conditions in Africa.
- The group is comprised of 3 institutions: the African Development Bank (AfDB), the African Development Fund and Nigeria Trust Fund.
- 81 member countries, with funding available to 17 middle-income countries.
- Eligible projects to be financed are expected to lead to poverty reduction and job creation, as well as inclusive growth
- 2025 goals include creation of 205 million power connections, lifting 130 million people out of poverty, creating 35 special economic zones, strengthening public-private partnerships, facilitating intra-African trade, and creating 25 million jobs.
- AfDB benefits from strong shareholder support, and has a strong liquidity and capital profile.
Bond Details
- Maturity: Sep 2029
- S&P credit rating: AAA
- Currency: EUR
Analyst sustainability checklist
- Use of proceeds: Food security and sustainable food systems
Affordable basic infrastructure
Access to essential services
Affordable housing
Employment generation
Socioeconomic advancement and empowerment
- % of proceeds allocated: At least 75%
- Reporting frequency: Annual
Sustainable Bond
Case study: beyond green financing
AMERICAN EXPRESS COMPANY (AXP), United States
American Express – a global payments company
- First ESG bond issued by this company
- Green projects include those related to green buildings and circular economy initiatives such as the use of recycled plastics for Amex credit cards
- Socioeconomic advancement & empowerment initiatives include efforts to increase diversity of suppliers and investments in small and medium-sized businesses
- Issuer has launched a Community Giving Mission, providing grants to help empower diverse communities
- Grants will be awarded to programs which improve financial literacy and provide training for small business owners, and to initiatives which advance innovation on climate action.
Bond Details
- Maturity: May 2029
- S&P credit rating: BBB+ (stable)
- Currency: USD
Analyst sustainability checklist
- Use of proceeds: Green buildings
Circular economy
Socioeconomic advancement and empowerment
Affordable housing
- % of proceeds allocated: At least 75%
- Reporting frequency: Annual
An active, transparent, sustainable core bond portfolio
Build a diversified fixed income portfolio financing green, social and sustainable projects.
More Information
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