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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 the companies positioned to be resistant to future market shocks 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 designed to 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 with sufficient return-generation potential, 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 a near-term focus on profits.

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 what we view as an optimal and bespoke long-term solution objective.

Robeco has a long history in buy-and-maintain investing, helping many clients in their efforts to achieve their unique objectives over long timeframes. With our in-house combination of insurance and pensions analytical capabilities, our proprietary 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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