HSBC AM Announces Launch of Asia ESG Bond Fund Investing in Low Carbon Intensity Companies

Published on: 1 February 2022 12:42 PM
by KnowESG
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A Brief Summary

HSBC Asset Management has launched a bond fund that invests in Asian firms that are assessed to have strong ESG practises, with an emphasis on lowering carbon intensity.  In addition to green bonds, sustainability-linked bonds, transition bonds, and social bonds. 

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The new fund will invest in a portfolio of Asian bonds with a strong bias towards issuers with sound ESG profiles, aiming for a higher ESG score and a lower carbon intensity score than its reference benchmark, the JPMorgan ESG Asia Credit Index, which is classified as Article 8 under the EU SFDR regulation.

The negative screening will be used to screen out industries with low ESG ratings, such as weapons, thermal coal, gambling, and tobacco, as well as issuers that violate the UN Global Compact Principles. The fund will also invest in environmentally friendly bonds, such as green bonds, sustainability-related bonds, transition bonds, and social bonds.

The new fund will be managed by Alfred Mui, Managing Director, Head of Asia Fixed Income Investment Management, and Wilson Yip, Associate Director, Fixed Income. Mui said: “Last year, we saw Asia issue a record amount of green, social and sustainability-linked US dollar bonds, demonstrating that growth in the space is strong. As governments and companies across the region plan their paths to net zero, the demand for debt financing to support green projects will grow.”

“This opens up an opportunity for global investors to take part in Asia’s transformation through an ESG-enhanced Asian bond strategy, which also has a potential to offer higher yields versus other comparable markets. At the same time, investing in Asia ESG bonds does not come at the expense of performance, according to historical data.”