New climate fund launched: Robeco Climate Global High Yield Bonds, benchmarked against the Solactive Global High Yield Corporate PAB Select Index
Investors have been increasingly emphasizing aligning investment decisions with ESG values. This trend has led to a growing number of investment products that take into account ESG factors in their strategies. In the light of this movement, Robeco launched Robeco Climate Global High Yield Bonds, benchmarked against the Solactive Global High Yield Corporate PAB Select Index, which offers exposure to the performance of global high yield corporate bonds while adhering to the carbon reduction criteria of the Paris-aligned Benchmark regulation.
The Solactive Global High Yield Corporate PAB Select Index considers various factors in its weighting methodology, including decarbonization objectives, bond issuance levels, yield levels, and foreign exchange rates. Through the use of multiple providers of ESG data that broaden the coverage, this PAB Select index incorporates a higher number of bonds and issuers compared to the standard Solactive Paris Aligned Corporate High Yield Index. In alignment with the standard PAB series, bonds lacking any required ESG data points are excluded from the eligible universe. Solactive sets strict criteria for its Paris-aligned Benchmarks (PAB) that surpass regulatory requirements. In addition to carbon reduction standards, companies failing to meet specific ESG requisites, such as substantial involvement in controversial weapons, hard coal, fossil fuel production, or tobacco, are also excluded.
Solactive takes a comprehensive approach to emission reduction, including Scope 1, 2, and 3 emissions, as well as carbon intensity based on book values for debt and equity. This approach implies a stricter carbon reduction methodology, extending the requirements also to carbon intensities. Despite compliance with rigorous PAB criteria, Solactive maintains a close index alignment with the general market benchmark risk/return characteristics.
As a pioneer in the PAB-ESG fixed-income index space, Solactive offers a wide range of PAB indices in various currencies and sectors, along with customized solutions.
Timo Pfeiffer, Chief Markets Officer of Solactive, comments: “We recognize the growing importance of investors seeking to align their investments with ESG values. That’s why we are proud to offer a diverse range of PAB indices and customized solutions, providing investors with the opportunity to access global high yield corporate bonds while adhering to the carbon reduction criteria of the Paris-aligned Benchmark regulation.”
Erik van Leeuwen, Head of Fixed Income Robeco, comments: “Robeco is at the forefront of sustainable investing. As investors, we can actively steer the way capital is deployed. Using the Solactive Global High Yield PAB Select index provides our clients with a robust method to track the decarbonization trajectory of their high yield investments, while making sure their investments are in adherence with the goals of the Paris Agreement.”