The senior fixed income portfolio manager at Border to Coast Pensions Partnership has told the Pensions and Lifetime Savings Association’s local authority conference that there will be “greater opportunities” for pension funds to extract value from the sustainable bond market.
Daniel Loughney told delegates: “When it comes to sustainable bonds, I am convinced that the political desire [from UK and European authorities] is there.
“Therefore, the market will grow deeper and deeper and because of that there will be greater opportunities for the pension fund industry to extract value from it.”
Sustainable bonds can be issued by any organisation where the proceeds are used to finance a combination of green and social projects.
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The International Capital Market Association’s (ICMA) green bond principles, released in June 2021, govern the issuance of green, sustainable, and social bonds. The new principles promote transparency and disclosure when issuing bonds serving environmental purposes to support sustainable development.
Loughney highlighted that the ICMA principles should bring comfort to investors, which will create a sizeable amount of new investment into sustainable bonds.
He added: “In three, four or five years’ time we will have a much broader sustainable [bond] market, which is much more transparent, and investors will be able to make much better decisions.”
Loughney also stated that the opportunity to invest in sustainable bonds has increased over the last five years due to growth of the European bond market.
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