L&G Net Zero Global Corporate Bond will have a broad credit allocation in which all the assets are targeting net zero emissions by 2050, as well improved portfolio temperature alignment through decarbonisation objectives and enhanced long-term outcomes through meaningful engagement with the companies in the portfolio.
LGIM said that this fund launch has been driven by client demand and for ‘climate aware solutions’.
Targeting wealth managers alongside institutional investors across the UK and Europe, the fund will offer a “progressive approach to reducing carbon emissions intensity” otherwise known as the fund’s own pathway to net zero.
This involves measuring the climate risk embedded in the portfolio and its total climate alignment, all while drawing from the energy transition scenario insights of LGIM’s proprietary climate risk framework.
The fund will be managed by Matthew Rees and Enda Mulry.
Rees said that while clients are constantly seeking yield and diversification, they now want this to be aligned with positive ESG outcomes.
“This fund has been specifically designed to help investors achieve alpha generation, as well as positive climate and wider ESG objectives,” he said.
This is one of a wave of ESG aligned products which have been launched this year as asset houses both respond to demand, but also look to capitalise on investors’ growing social and climate awareness.
Steven de Vries, head of wholesale for UK, Europe and Latin America at LGIM, was keenly aware of this fact, adding: “Investors are nowadays facing a large number of products offering climate and ESG outcomes.
“We believe that this fund is unique as it follows a clear pathway to net zero, guided by our proprietary climate framework, and benefits from our engagement with our invested companies and the work from GREGs on raising societal and governance standards.
“The fund’s investments align with LGIM’s own ‘Future World Protection List’ baseline exclusion, raising the bar for companies to be included in the portfolio. It also uses the firm’s proprietary UN Sustainable Development Goals (SDG) scoring process to assess the long-term sustainability of issuers through their revenue generation and sustainable business practices. Issuers that demonstrate a negative alignment to one or more of the SDGs will be excluded from the portfolio.”
The fund will have an ongoing charges figure of 0.41%.