united kingdomen
Integrating ESG in Euro Government Bond portfolios

Integrating ESG in Euro Government Bond portfolios

07-07-2014 | Insight

The ESG ranking of a number of euro periphery countries has improved, after having reached a low in 2010. These changes give information on developments in a country’s investment risk. We use this information to identify trends in, for instance, the political climate that are relevant for our investment decisions.

  • Olaf  Penninga
    Olaf
    Penninga
    Senior portfolio manager fixed income
  • Rikkert  Scholten
    Rikkert
    Scholten
    Portfolio manager fixed income, sustainable investing
  • Both ESG profiles and changes in profiles give relevant information 
  • Clear relationship between Country Sustainability Ranking and positions in euro government bonds

Changes in ranking are relevant for our investment stance Changes in the scores and in the ranking show whether a country is improving or not. By taking changes in the ranking into account we acknowledge the efforts to improve in the fields of E, S and G, although the effects may only be visible after some time has passed. After all, reforms require effort and often hurt some vested interests before bearing fruit. By investing in these countries instead of avoiding them, investors support the reform process and can profit from investing in countries that aim to improve, rather than wait until the improvements have lifted the country to the level where it is ‘best in class’. A somewhat lower, but still acceptable ranking means that change –and support for change- is necessary. Whether or not those changes are happening will impact our investment stance. 

Furthermore, from an investment viewpoint we believe that opportunities exist where improvements are being made. If a country has already reached a high score this suggest that a country can have safe haven qualities in times of unrest – next to ‘traditional’ aspects like a low government debt and solid current account. This is indeed what we have seen during the euro crisis in countries like Germany, or Austria, but also outside the euro area in the Scandinavian countries.

Stay informed on our latest insights with monthly mail updates
Stay informed on our latest insights with monthly mail updates
Subscribe

Disclaimer

Please read this important information before proceeding further. It contains legal and regulatory notices relevant to the information contained on this website.

The information contained in the Website is NOT FOR RETAIL CLIENTS - The information contained in the Website is solely intended for professional investors, defined as investors which (1) qualify as professional clients within the meaning of the Markets in Financial Instruments Directive (MiFID), (2) have requested to be treated as professional clients within the meaning of the MiFID or (3) are authorized to receive such information under any other applicable laws. The value of the investments may fluctuate. Past performance is no guarantee of future results. Investors may not get back the amount originally invested. Neither Robeco Institutional Asset Management B.V. nor any of its affiliates guarantees the performance or the future returns of any investments. If the currency in which the past performance is displayed differs from the currency of the country in which you reside, then you should be aware that due to exchange rate fluctuations the performance shown may increase or decrease if converted into your local currency.

In the UK, Robeco Institutional Asset Management B.V. (“ROBECO”) only markets its funds to institutional clients and professional investors. Private investors seeking information about ROBECO should visit our corporate website www.robeco.com or contact their financial adviser. ROBECO will not be liable for any damages or losses suffered by private investors accessing these areas.

In the UK, ROBECO Funds has marketing approval for the funds listed on this website, all of which are UCITS funds. ROBECO is authorized by the AFM and subject to limited regulation by the Financial Conduct Authority. Details about the extent of our regulation by the Financial Conduct Authority are available from us on request.

Many of the protections provided by the United Kingdom regulatory framework may not apply to investments in ROBECO Funds, including access to the Financial Services Compensation Scheme and the Financial Ombudsman Service. No representation, warranty or undertaking is given as to the accuracy or completeness of the information on this website.

If you are not an institutional client or professional investor you should therefore not proceed. By proceeding please note that we will be treating you as a professional client for regulatory purposes and you agree to be bound by our terms and conditions.

If you do not accept these terms and conditions, as well as the terms of use of the website, please do not continue to use or access any pages on this website.

I Disagree