Buy-and-maintain credit: sustainability matters

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.

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.

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.