Climate Change: sustainable returns, real-world impact via active transition investing
How bond investors can potentially achieve decent returns for their portfolios and help the planet. Here’s an Asian perspective.
Environment
> 50%*
of global GDP is moderately or highly dependent on nature
US$ 125tn**
is the estimated value of ecosystem services provided by nature, free-of-charge
69%***
decrease in global wildlife population observed, since 1970
Preserving natural capital
A healthy planet is critical to the global economy and our way of life. Unfortunately, in recent decades the world has experienced significant levels of nature loss. With this loss comes increased potential environmental economic risks from supply chain disruptions, regulatory restrictions and costs and changing client demands.
As investors we don’t see the risks linked to the loss of our planet’s life support systems as something niche, sitting only in responsible investment products. This is why we have developed an investment approach to natural capital, based around six key areas of focus.
As investors we don’t see the risks linked to the loss of our planet’s life support systems as something niche, sitting only in responsible investment products. This is why we have developed an investment approach to natural capital, based around six key areas of focus.
- Research and dataEnhancing our understanding of the implications of unsustainable use of natural capital across asset classes and regions; providing/sourcing data to measure this.
- Investment integrationBuilding upon the data and tools we use to enable decision makers to make informed choices when considering the preservation of natural capital within portfolios.
- Client solutionsUnderstanding clients’ expectations and develop investment solutions that can help deliver nature-positive outcomes.
- Active ownershipBetter understand how the businesses we’re investing in manage their nature-related risks and opportunities. We’re also using our leverage to challenge investee practices and encourage improvements.
- Collaboration and influenceCollaborating with relevant industry associations and initiatives; engaging with peers and policy makers to encourage improvements and develop best practices.
- DisclosureEncouraging better disclosure in line with Taskforce on Nature-related Financial Disclosures (TNFD) recommendations.
The consideration of environmental risks and opportunities is an integral part of our investment process. A good understanding of environmental issues allows us to make better investment decisions for our clients. We encourage companies to take corporate responsibility and tackle environmental issues and we expect them to demonstrate their commitment to improve their environmental performance.
For insights on other research pillars
Climate change - Enabling a net-zero world
Social - Promoting a fairer society
Cross ESG themes
Governance - Championing strong governance and business ethics
Find out more about abrdn sustainable investing