A New Report from Community Capital Management
The Report’s Introduction
Community Capital Management (CCM) is a pioneer in managing fixed income impact investing and fossil fuel free portfolios. We incorporate the “environmental” and “social” aspects of ESG investing in our investment philosophy by proactively screening market-rate bonds that positively contribute to economic and sustainable impact.
One of the main developments seen so far in the sustainable bond space has been driven by green bonds. We are seeing growing progression towards sustainable bonds with a wider focus on environmental and/or social positive impact. In fact, as noted below, the Green Bond Principles (GBP) released an update to its use of bond proceeds earlier this summer to include themes with social objectives.
CCM continues to focus upon the ultimate use of proceeds for all impact investments, green bonds included. For us, a threshold declaration of green intent by an issuer is a starting point. We need to be able to identify, record, and track the underlying environmental and social activity that the transaction supports. In this regard, we use a combination of proprietary research augmented by the use of third-party standards to screen our portfolios ensuring bonds purchased support one or more environmental initiatives.
Our analysis follows the guidelines of the GBP which focuses on four core components: Use of Proceeds, Process for Project Evaluation and Selection, Management of Proceeds, and Reporting. In June 2016, an update to the GBP was released which included an update to the bond concept “use of proceeds” to themes beyond the environment, such as bonds financing projects with social objectives, or with a combination of social and environmental objectives. The GBP are voluntary process guidelines that recommend transparency and disclosure and promote integrity in the development of the green bond market by clarifying the approach for issuance of a green bond.
Why Fixed Income
Fixed income is an ideal place to start making sustainable investments for two primary reasons:
First, it is typically a lower-risk asset class with lower volatility and greater liquidity than other sustainable asset classes.
Second, there are tangible positive environmental outcomes that can be measured quantitatively and monitored qualitatively. The additional research associated with sustainable fixed income investments provides an added layer of transparency by detailing the use of bond proceeds to analyze the investment’s sustainable benefit.
By incorporating positive social and sustainable outcomes into fixed income investment decisions, investors can align these assets with their beliefs or missions.
Find the Full Report on CCM website at- http://www.ccminvests.com/
