Global Impact Annual Report – Executive Summary
As a preview to our full annual report for the Global Impact Fund and Global Impact Bond Fund, please use the interactive experience below to see a few key highlights from our impact platform in 2021.
You will also be able to read how we approached the investment opportunities in one of our 11 impact themes, and how we measured the impact progress and outcomes for a sample holding in each fund over the past year.
Our commitment to net zero
In December 2020, Wellington became a founding member and signatory to the Net Zero Asset Managers (NZAM) initiative. This early commitment is grounded in our primary goal of achieving our clients’ investment objectives and enables us to demonstrate continued leadership on climate action. It also helps us deepen company engagements and enhance consultative partnerships with clients and industry leaders. Through NZAM, we commit to the following:
- Partner with asset-owner clients on their decarbonization goals, consistent with achieving net-zero emissions by 2050 or sooner
- Set an interim target for the proportion of assets to be managed in line with that goal
- Review the interim assets-under-management (AUM) target at least every five years with the aim of increasing the proportion of assets covered, until 100% are net zero
- For assets committed to net zero, set an interim 50% emissions-reduction target by 2030
Investing in ESG leaders with a stewardship lens
The value of strong corporate stewardship is gaining wider recognition across the investment industry. When companies are led by an engaged board and a strong management team, allocate capital wisely for the long term and act in the best interest of all stakeholders, they have greater potential to’reinforce their competitive advantage and enhance returns over time.
Asset owners are increasingly drawn to investment strategies that combine responsible investing and competitive long-term returns. Stewardship grows in importance as you extend your time horizon. A long investment horizon and a high bar for inclusion result in a low turnover strategy that drives returns from investing in companies that incorporate ESG risks and opportunities into their business strategy to build long-term advantage in the pursuit of profit. But how do good corporate stewards create value over time and what constitutes effective stewardship investing?
Sustainable fixed income investing comes of age
- Growing awareness of how risks such as climate change can impact financial markets’ risk-adjusted returns is leading more market participants to embrace sustainability and sustainable investing as critical to the long-term health of global markets.
- The sheer size of global fixed income markets and the variety of ways in which they touch the real global economy demand that the asset class be part of the broader conversation about ESG and sustainable investing.
- The heterogeneity of the fixed income universe presents both opportunities and challenges for fixed income managers and allocators alike who want to make ESG and/or sustainable investing a priority.
- From sovereign debt to corporate and securitized credit, each segment the global fixed income markets faces challenges with ESG and sustainability, yet each is at a different stage of its “journey” (some further along than others).
- We believe it is essential that asset managers be able to tailor their approaches to ESG and sustainability to each particular fixed income sector in order to effectively address the challenges and opportunities therein.
2021 sustainability highlights
In 2021, we bolstered sustainability across our investment, client, and infrastructure platforms, expanding our team of sustainability-focused professionals and strengthening our leadership and governance ecosystem. We also continued our research on the impacts of climate change on markets, economies, and the portfolios we manage on behalf of our clients. Our focus sharpened on stewardship and engagement, too, as active ownership is a core part goal of our process for aiming to generate competitive returns for our clients. Finally, we made progress on our corporate sustainability. Here are a few highlights from the year. We welcome you to read our full 2021 Sustainability Report below.
Financial and social value of investing sustainably
We believe companies committed to sustainability and positive environmental, social, and governance (ESG) can increase in value and develop strategic advantages over time.
Wendy Cromwell, CFA, Head of Sustainable Investment
How a diversified approach to climate return opportunities can support decarbonisation goals
We expect the transition toward a net-zero carbon economy to speed up with the intensifying effects from climate change alongside regulatory and societal pressure. Investors need and want to be part of the solution, however, moving from intent to implementation can be challenging. Here, Joy Perry and Ken Baumgartner explore how a diversified approach to climate return opportunities can support decarbonisation goals.
Evaluating labelled bonds: a robust framework is key
In this rapidly evolving market, we believe investors need a thoughtful approach to assessing issues’ suitability and combatting greenwashing, in order to generate real impact.
2021 Sustainability Report
Sustainability is a strategic priority for our firm and an integral part of our commitment to our clients. By focusing on our clients’ objectives and pairing intellectual curiosity with discipline, we believe we can help our clients meet their long-term goals in a changing world. We appreciate the opportunity to share our approach to advancing sustainable practices across our investment, client and infrastructure platforms.