State Street Global Advisors Launches Green Bond Investment Strategy
October 19 2011 - 8:43AM
Business Wire
State Street Global Advisors (SSgA), the investment management
business of State Street Corporation (NYSE: STT), today announced
its new High Quality Green Bond strategy which offers investors a
way to direct fixed income investments to climate solutions.
Issued primarily by the World Bank, European Investment Bank,
and other supranational and multilateral development banks, green
bonds allocate the proceeds of the bond offering to fund
environmentally beneficial development projects. In the past two
years, the nascent green bond market from these issuers has grown
from $1 billion to $5 billion outstanding. Overall, the estimate
from all issuers of green bonds is approximately $12 billion¹.
“Investment managers are being asked more frequently by their
clients to consider sustainability and environmental factors in
their approach to the market,” said Chris McKnett, head of
environment, social and governance (ESG) investing at SSgA. “The
development of a green bond strategy as a complementary solution to
our other ESG investment offerings was driven by increased market
demand amongst investors.”
SSgA’s High Quality Green Bond Strategy seeks to approximate the
duration of its duration benchmark – the Barclays Capital U.S.
Treasury Index² – through investments principally in green bonds
and other debt instruments.
Brian Kinney, global head of SSgA’s Fixed Income Beta Solutions
commented: “This new offering is not only a significant milestone
within our expanding line up of ESG investment solutions but also
presents investors with a solid investment option as part of their
overall fixed income allocation.”
SSgA will primarily invest in green bonds issued by
supranational or multilateral development banks. These green bonds
have similar financial features to standard bonds issued by these
same organizations. They are of high credit quality and come from
reputable issuers that are backed by large balance sheets and known
institutions.
Eligible green bond issuers undertake extensive due diligence
with the aim of financing projects that provide positive economic
and environmental benefits. Projects financed by green bonds
generally fall into one of two categories: those seeking to
mitigate climate change or projects seeking to adapt to its
effects.
"With the immense amounts of financing needed for countries to
support their climate mitigation and adaptation activities,
initiatives like green bonds that help raise funds from the private
sector and increase awareness for these challenges are vital,” said
Andrew Steer, Special Envoy for Climate Change, World Bank. “We
welcome SSgA's efforts to provide their clients with fixed income
products that help raise financing for climate solutions, and are
happy to have played a catalytic role to the growth of the green
bond market."
With more than $122 billion in overall ESG assets³, SSgA is one
the world’s largest managers of ESG investments. The High Quality
Green Bond Strategy is supported by the ESG team, comprised of five
professionals with an average of eight years of experience overall
and four years in an ESG capacity.
State Street is one of the world’s largest fixed income managers
with $306 billion in assets4.
About State Street Global Advisors
State Street Global Advisors (SSgA) is a global leader in asset
management. The firm is relied on by sophisticated investors
worldwide for its disciplined investment process, powerful global
investment platform and access to every major asset class,
capitalization range and style. SSgA is the asset management
business of State Street, one of the world's leading providers of
financial services to institutional investors.
¹SSgA, Climate Bonds Initiative
²The Barclays U.S. Treasury Index is a trademark of Barclays
Capital, Inc.
³June 30, 2011
4 September 30, 2011
Investing involves risk including the risk of loss of
principal.
Bond funds contain interest rate risk (as interest rates rise
bond prices usually fall); the risk of issuer default; issuer
credit risk; liquidity risk; and inflation risk.
Derivative investments may involve risks such as potentially
illiquidity of the markets and additional risk of loss of
principal. There are a number of risks associated with futures
investing including but not limited to counterparty credit risk,
currency risk, derivatives risk, foreign issuer exposure risk,
sector concentration risk, leveraging and liquidity risks.
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