Last year, GAM Investments launched its climate bond strategy, as part of its aim to contribute to a net-zero future, having joined the Net Zero Asset Managers initiative in 2021.
A focus on green bonds issued by European financial institutions means the strategy invests in a wide range of environmental projects from green mortgages to renewable energy farms.
"Climate change is one of the largest and most pressing risks for the global economy and banks have a pivotal role in driving the environmental transition, by supporting both large and small companies.
Banks finance approximately 80% of European corporates and are the key source of financing for small- and medium-sized enterprises," commented Romain Miginiac, fund manager and head of research at Atlanticomnium, which manages the strategy on behalf of GAM.
"In the energy sector alone, for example, the top 35 banks provided close to $3 trillion of funding in the financial years from 2016 to 2019.
"Beyond their direct impacts, the banks also have a multiplier effect on the rest of the economy through their engagement with existing clients.
"The strategy adopts an active, bottom-up, high-conviction approach, providing significantly higher yields and spreads compared to equivalent European investment grade bonds.
"Generating a positive environmental impact is a key objective of the strategy and we see no trade-off between impact and returns," he added.
GAM uses third-party environmental data firm Carbone 4 to estimate the environmental impact of each individual green bond, as well as at an aggregate level for the fund.
"Our approach to impact reporting ensures we have a robust, credible, and independent account of the strategy's positive impact," said Stephanie Maier, global head of sustainable and impact investment at GAM.
GAM's impact report lists the positive environmental impacts of the green assets financed.
According to the 2022 impact report, in its first year, the projects financed by the green bonds in the portfolio helped avoid 1,580 tonnes of carbon dioxide equivalent emissions– equivalent to driving a car more than 200 times around the Earth.
They also helped install 2.8 megawatts of renewable energy capacity and to financing around 1500m2 of green buildings..