ESG & Sustainable Investing

At TwentyFour, ESG - Environmental, Social and Governance - factors, are a critical component in our investment process. This video explains our approach to ESG integration at TwentyFour.

As with many things ESG related, interest in, and issuance of, green bonds is growing rapidly.

Graeme Anderson hosted abreakout session in the ESG tent where he discussed TwentyFour's ESG Integration model, how company behaviour affects our ESG scoring and how our Observatory relative value system has enabled us to build ESG analysis into the investment process the portfolio managers use every day.

Green bonds have seen dramatic growth both in terms of market size and media coverage in recent years. In 2019 we saw $237bn of issuance, a 62% increase on 2018’s $146bn, from a mixture of sovereigns, financials and corporates; and in its wake has come a proliferation of dedicated green bond funds.

Today BBVA announced it would be issuing the first ever green Additional Tier 1 (AT1) bond, a perpetual non-call 5.5-year with initial price thoughts at 6.5%, and immediately sparked a spirited debate among the TwentyFour team over how green bank capital can be.

As regular readers of this blog will know, TwentyFour has adopted ESG integration throughout its investment process for all strategies, and launched its first sustainable fund offering in January 2020. In doing so, we have engaged in some fascinating debates with clients and peers about the growing impact of ESG objectives on the fund management industry, and on fixed income markets in particular. Here are a few of our predictions for the years ahead.

Companies, even earnings pressured ones, now need to seriously consider the negative impact on their long term cost of capital from short term decisions to shore up P&L.

Partner and Portfolio Manager Chris Bowie discusses our new sustainable, short duration credit fund; TwentyFour Sustainable Short Term Bond Income.

TwentyFour Asset Management, the London and New York-based specialist fixed income boutique of Vontobel Asset Management, has launched the Vontobel Fund - TwentyFour Sustainable Short-Term Bond Income Fund.

"One group of issuers that appears vulnerable to us as we move into a new decade is those facing increased investor scrutiny due to Environmental, Social and Governance (ESG) factors. The case of CoreCivic, a listed REIT in the US, is a good example"

“NIBC, has been involved in ESG/CSR focused lending in Europe for some time, and is the first manager to issue what we might call an ESG CLO." Elena Rinaldi discusses why in terms of ESG, NIBC would receive a high score from us.

At TwentyFour Asset Management we believe Environmental, Social and Governance (ESG) factors can have an influence on the value of our investments, and we have recently formalised our approach to these risks by integrating an ESG framework throughout the firm’s investment process, across all strategies.