GAM Investments has launched a new sustainable climate bond strategy that allocates to green and sustainability bonds with positive environmental impact issued by the European financial sector.

The bond market for climate change solutions is worth more than US$100 trillion and mobilizing this capital is key to advancing the low-carbon transition. For this reason, GAM has also joined the Climate Bonds Initiative, whose purpose is to drive forward this process.

The launch of the sustainable climate bond strategy recognises the pivotal role banks, in particular, will play in the environmental transition as the primary source of financing for European corporates and for small and medium-sized enterprises. In the first half of 2021, green bond issuance by European banks reached US$100 billion, driven by a record US$33 billion in the first half of 2021 alone. Issuance is expected to remain strong, driven by banks’ commitments to finance the green economy.

The GAM strategy will be managed by Atlanticomnium, an independent Geneva-based fund management company, which specializes in credit investing and has managed assets for GAM since 1985. The strategy draws upon the team’s experience and historical strong track record investing in the bonds of financials and their established history of analysing issuers, conducting close engagement and building deep relationships with issuers and regulators.

The strategy adopts an active, bottom-up, high-conviction approach, investing in bonds which allocate proceeds to eligible green projects across market caps with measurable impact, such as renewable energy and green buildings.

To identify bonds that the investment team believes will deliver meaningful impact, the team applies its green bond assessment framework, which is split into three layers of analysis – issuer, bond and green asset level – that are interwoven into the team’s overarching process. Each layer is assessed individually, using proprietary research and data from external third parties.

The strategy, which has an average rating of BBB+, is classified as Article 9 under Sustainable Finance Disclosure Regulations, and investors will receive an annual impact report, outlining the associated quantitative positive environmental benefit of their investment.

“Asset and wealth managers control more than US$110 trillion of capital, and how these assets are managed will be key to whether or not we are able to achieve the shared global goal of net-zero emissions by 2050 or sooner,” says Stephanie Maier, global head of sustainable and impact investment at GAM. “The sustainable climate bond strategy, is a compelling offering for investors seeking to generate both a meaningful environmental impact and attractive returns.”