Recent events highlight the mounting challenges facing society. From the pandemic, which underscored the widespread need for improved health care and internet access; to the ambitious goals set at the UN Climate Change Conference (COP26); to Russia’s tragic invasion of Ukraine, which has led to a cascade of social and environmental problems and a sharpened focus on cybersecurity and renewable energy.
As the world’s large challenges mount, investors are seeking ways to make a difference, increasingly turning to public markets as a means of using their capital to “do good”. With impact investing, investors can participate in a market that offers the potential for long-term growth, competitive investment returns, and opportunities to create positive real-world change.
In public fixed income markets, our impact universe includes traditional issuers addressing critical needs through their core products and services and a subset of “sustainable debt” issuance, including green bonds, social bonds, sustainable bonds, and sustainability-linked bonds. This market is expanding quickly, as is the flow of capital targeting solutions for these needs.
At Wellington, we take a non-concessionary approach, aiming to maximise impact and deliver competitive investment returns for our clients. In our view, selectively investing in what we believe are strong companies that stand out as addressing impact themes offers compelling return opportunities. Increasingly, market participants are recognising issuers that are developing differentiated solutions for social and environmental needs. We expect demand for these issuers to increase and for impact issuers to benefit from structural tailwinds, given their focus on essential products and services that address some of the world’s most pressing issues.
We believe public fixed income markets offer many opportunities for investors to generate widespread impact. Working with an experienced investment manager with an established impact platform, deep research capabilities, and an extensive fixed income background may be a sensible solution for investors looking to harness today’s impact momentum and generate positive real-world change through their investments.