Demystifying ‘Green,’ ‘Social’ and ‘Sustainable’ Bonds

What are green, social and sustainable bonds? What is their purpose?

Sustainable investing 25 Mar 2022 3 min read

Jonathan Gregory

Head of Fixed Income UK, Senior Portfolio Manager Managing Director

Key Takeaways

We believe that the GSS market is now firmly established as an important subset of the global bond universe, and one that is likely to maintain a very high rate of growth.
GSS bonds may offer attractive long term investment opportunities and we see an active approach is a ‘must-have’ to drive good risk adjusted returns over time.
GSS bonds have a role to play for investors looking to make hard-wired ‘impact’ allocations in their portfolios. Some features of the GSS universe mean that it is not yet ready to fully supplant more established traditional core bond allocations. But GSS bonds should be taken seriously as an active investment opportunity nonetheless.
A sound active investment approach will rotate freely across sectors and markets.
GSS and conventional bonds should be assessed in tandem and investment decisions made on the relative merits of the pricing of risk, not the label.