Columbia Threadneedle: Europe’s first mainstream social bond fund celebrates 3rd anniversary

2 juni 2020

Columbia Threadneedle Investments, a pioneer in social bond investing, announces that the Threadneedle (Lux) European Social Bond fund (the Fund) is celebrating its three-year anniversary having consistently outperformed its benchmark throughout the entire period[1] whilst optimizing social alpha. This three-year milestone dispels the myth that investors need to sacrifice investment performance to achieve social impact.

The Fund aims to deliver both a financial and a social return by investing in corporate bonds across Europe with a clear focus on supporting positive outcomes for individuals, communities or society as a whole. By actively selecting specific bonds with positive social outcomes, rather than excluding bonds through conventional negative screens, portfolio manager Simon Bond and his team aim to generate positive social and financial results. The portfolio also offers daily liquidity.

To achieve positive outcomes, the Fund takes an evidence-based approach according to a defined social opportunity framework targeting seven areas of impact from primary social needs through to societal development including affordable housing, health, education and employment. In addition, each investment is mapped to its primary United Nations Sustainable Development Goal (UNSDG) through the 169 underlying targets set out by the UN.

The Fund was launched in May 2017 in partnership with INCO, a leading global consortium for a new, inclusive and sustainable economy. INCO acts as an independent advisor of the Fund, providing its expertise in the field of social and environmental evaluation. Each year upon the fund’s anniversary, INCO produces the Fund’s annual Social Impact Report.

The Social Advisory Panel plays a vital role in reviewing, checking and monitoring the Fund, while ongoing monitoring checks are undertaken by Columbia Threadneedle’s Mandate Monitoring and Responsible Investment teams, helping to ensure the integrity of the Fund’s social impact. The Panel is also responsible for the creation of the Fund’s annual Social Impact Report.

Simon Bond, manager of the Threadneedle (Lux) European Social Bond Fund, said: “After three years managing the Fund and over six years managing our social bond strategy in the UK, we are pleased to be demonstrating that you don’t have to sacrifice financial returns in order to benefit society. When considering environmental, social and governance (ESG) investments, social attributes are often overlooked for the more salient environmental and governance characteristics. However, we may be entering a period where social investing comes to the fore. The coronavirus pandemic is a social issue that has brought unprecedented disruption to societies and is impacting the wellbeing of the world’s population. Capital markets are responding to this challenge with $46.4[2] billion in dedicated COVID related issues so far this year using Social or Sustainability Bonds. However, more can be done and we are keen for countries, companies and supranational issuers to consider issuing social bonds to tackle the unprecedented consequences of Coronavirus on society.”

Jean-Michel Lecuyer, Chairman of the Social Advisory Panel at INCO: commented: “INCO is very pleased to be associated with Columbia Threadneedle Investments, in operating the European social bond fund, which allows individual or institutional investors to contribute to the financing of social impact projects, within a framework of rigorous control and reporting both of its financial and extra-financial parameters.”

The Fund reflects Columbia Threadneedle’s long-term active investment approach, incorporating best-in-class credit research and Environmental, Social and Governance (ESG) analysis, combined with INCO’s social development expertise and network in Europe.

Columbia Threadneedle manages over 500 million US dollars (as of May 2020) across its social bond funds.

[1] Since inception on 24 May 2017

[2] As at 22 May 2020, source: Bloomberg, Morgan Stanley and Selected Issuers