A new HSBC AM bonds fund is aiming to make a positive ESG impact in emerging markets.
With $50 million of start-up backing from Finnish pension insurance firm Varma, the Global Emerging Markets Corporate Sustainable Bond fund will tackle issues like climate change and social inequality alongside the greater provision of clean water and better healthcare for communities in need.
The SDFR Article 9 offering will invest in fixed income like bonds and other securities issued by EM companies that contribute to the UN’s Sustainable Development Goals (SDGs).
The 17 SDGs – which include a drive to end poverty, prevent wars and establish gender equality – were established in 2015, and many have an ideal deadline of 2030.
HSBC AM’s head of global EM debt Luther Bryan Carter will lead the new fund alongside senior portfolio managers Caroline Keany and Julio Obeso.
Carter said: “Emerging markets are at the epicentre of sustainable investing, a just transition and Paris Agreement alignment.
“As investors, we believe direct and consistent engagement with emerging market issuers can offer opportunities for assessing their ESG plans and progress.
“It will help them tackle their challenges and gaps – and help drive positive change”.
HSBC AM plans to work closely with bond issuers whose sustainability goals align with their own.
The global asset manager believes this approach will result in a “high-conviction, low turnover portfolio which aims to ensure robust sustainability standards within emerging markets”.
It says the investment will be curbed in companies that fall short of their stated sustainability objectives.
Varma’s fixed income, currencies and commodities director Petri Ala-Harkonen said: “The fund’s investment strategy complements our emerging markets portfolio from a diversification perspective, given that it is mostly made up of government bonds.
“It invests in corporate bonds and takes careful consideration of the related sustainability aspects, and therefore deepens the consideration of sustainability as part of our emerging market investments”.
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