19-05-2026 • Active ETF in focus

The missing piece in climate investing: Euro government bonds

Climate Euro Government Bond ETF

Active ETFs are reshaping global investment markets, offering a flexible and transparent way to access active strategies. As adoption accelerates, the growing range of solutions raises a more practical question: where can they add the most value in portfolios?

In this series, we focus on areas where changing market dynamics or limitations in traditional approaches create a compelling case for a systematic active ETF approach. Here, we look at climate-tilted government bonds.

Authors

Anna Heldring

Investment writer

Jessica Monkivitch

Investment Writer

Top keywords

Opportunity in focus: Climate-focused sovereign bonds

Governments play a central role in financing and shaping the climate transition, while sovereign bonds remain a core allocation for many investors. Yet climate investing has largely focused on equities and credit, where investors can directly influence company behavior through capital allocation, leaving sovereign bonds relatively underrepresented.

Most sustainable euro government bond products either focus narrowly on green bonds or apply ESG filters that can distort risk and return characteristics.

This challenge is reflected in investor sentiment. As shown in Figure 1, concerns around maintaining performance remain the primary barrier to allocating to climate-focused strategies.

Figure 1: Performance concerns remain the key barrier to climate investing

Source: Robeco, 2025, “2025 Global Climate Investing Survey”, Robeco publication. This report is based on research commissioned by Robeco for its exclusive use, which was carried out from February to March 2025 by CoreData Research among 300 institutional and wholesale investors in Europe, North America, the Asia-Pacific region and South Africa. The investors are based at a range of organizations: insurance companies, pension funds, endowments and foundations, sovereign wealth funds, private banks, fund-of-funds, wealth management firms, wirehouse broker/dealers, registered investment advisors, family offices and turnkey asset management providers/DFMs.

Robeco’s Climate Euro Government Bond ETF is built to bridge this gap by combining transition-focused sovereign bond exposure with a risk and return profile that aims to remain in line with traditional bond benchmarks.

A more balanced approach to climate investing

This active ETF is designed with a dual objective: supporting the climate transition while preserving the core role of government bonds in portfolios. It combines a forward-looking approach through exposure to greener countries and green bonds while maintaining the benchmark-like characteristics of a traditional government bond portfolio.

This allows investors to align their sovereign bond allocations with the transition, without compromising their core role in providing liquidity, stability and diversification relative to riskier assets.

Transition-focused investing with benchmark-like characteristics

The active ETF supports the climate transition by focusing not only on low-emission countries, but also those making credible and measurable transition progress, alongside increased exposure to green bonds financing projects such as renewable energy and electrification.

At the same time, the strategy is designed to maintain benchmark-like duration, credit quality and overall risk/return characteristics while improving climate exposure. Exposures are managed at the bond level to help avoid unintended risks and remain closely aligned with traditional benchmarks.

How the investor benefits

1. Climate alignment without changing the bond role
Investors can support the climate transition without compromising the defensive role of euro government bonds in their portfolio. The active ETF aims to maintain a duration profile similar to the benchmark, while targeting comparable credit and spread risk exposure, with risk/return characteristics broadly in line with the benchmark
2. A broader climate approach than just green bonds
The ETF goes beyond simply buying labeled green bonds. It combines increased exposure to green bonds with a tilt toward eurozone countries demonstrating credible and ambitious climate transition policies, using a structured climate scoring framework. This supports both the financing of green projects and the broader transition at a sovereign level.
3. Active risk control at ETF pricing
Investors benefit from active portfolio construction at a 0.12% fee. The ETF manages exposures bond by bond to avoid unintended risks and aims to stay closely aligned with the traditional index. The result is active climate positioning delivered in a transparent, low-cost ETF structure.