Tara Torrens, Fixed income portfolio manager
Omer Brav, Quantitative analyst
Green, social or sustainable bonds (ESG bonds for the purpose of this article) are an increasingly popular way for fixed income investors to signal that they are taking ESG seriously. But how do they compare to traditional bonds? Is there a “greenium” to investing this way and if so, how can investors avoid paying it?
Our research indicates there is a spread concession for investors in ESG bonds. Given this valuation differential and a lack of standardisation within the ESG bond markets, we think that investors are better served with a broader approach to ESG that explicitly incorporates E, S and G analysis into the investment process.
Download the full paper here