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Buy-and-maintain credit: sustainability matters

Buy-and-maintain credit: sustainability matters

12-11-2019 | Insight

Sustainable investing is designed to sort future-proof companies from those that are not. It is an essential aspect of successful credit portfolio management. Due to their medium to long-term investment horizon, buy-and-maintain strategies inherently are focused on identifying sustainable companies – those investments that will survive and thrive over long time periods.

  • Remmert Koekkoek
    Remmert
    Koekkoek
    Head of Insurance and Pension Solutions
  • Guido Moret
    Guido
    Moret
    Head of Sustainability Integration Credits
  • Yvo Schoemaker
    Yvo
    Schoemaker
    Portfolio Manager

Speed read

  • Buy and maintain a perfect match with sustainability
  • ESG integration as an important risk-mitigation technique
  • Bespoke solutions targeting client-specific sustainability goals

Risk mitigation with ESG integration

Insurers and pension funds face the imperative of finding investment solutions that generate sufficient returns, all while managing risk in a world of low yields, market uncertainty and softening growth. Increasingly, these investors are incorporating their sustainability goals into their investment objectives.

ESG integration is an important risk-mitigation technique for any credit manager, especially now that the credit cycle is approaching a stage in which the risk of defaults and downgrades is increasing. Sustainable investing, which is designed to sort the future-proof companies from those that are not, is an essential aspect of successful portfolio management for buy-and-maintain credit portfolios.

ESG integration is an important risk-mitigation technique for any credit manager

Further, buy-and-maintain investors are able to optimize their ESG integrated portfolios to meet their own specific sustainability goals and requirements such as reducing the carbon footprint of a portfolio or creating an impact investment that targets the UN Sustainable Development Goals.

Sustainability is a natural fit for portfolios with a long horizon

The inherent focus on risk management, long-term stability and the bespoke nature of the investment style make it a natural fit with sustainable investing, and thus with integrating sustainability considerations at the time of the investment.

In fact, one of the most important observations of the European Commission’s High-Level Expert Group for sustainable finance is that sustainability and the long term are axiomatically linked, since investment in sustainable development requires a longer-term commitment of capital, beyond near-term profits.

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An integrated component of the credit management process

Our approach to buy-and-maintain portfolio management is to incorporate sustainability from the starting point. We apply our skills in sustainable investing, credit research and client-driven portfolio optimization to provide our clients with an optimal and bespoke long-term solution.

Robeco has a long history in buy-and-maintain investing, helping many clients to achieve their unique objectives over long timeframes. With our in-house combination of insurance and pensions analytical capabilities, our market-leading global credit platform and our pioneering role in sustainable investing, we are able to design high quality and truly client-driven credit portfolios. Clients are involved in each step, making this a true partnership.

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