Best fixed income firm initiative for ESG investment – Affirmative Investment Management (‘Spectrum’ criteria)

Channels: ESG

Companies: Affirmative Investment Management

People: Stuart Kinnersley

Affirmative Investment Management (AIM) is a specialist, employee-owned firm, managing fixed income portfolios that generate environmental and social impact.

"Our mission is to move large-scale capital into investments promoting environmentally and socially resilient communities, to support the 2015 UN Sustainable Development Goals (SDGs) and to support the global COP21 Climate Change Accord to limit global temperature increases to 2oC," it proclaims.

To identify suitable investments, it uses a proprietary investment process known as Spectrum emphasises the importance of deep analysis, high engagement and measurable outcomes. AIM analyses all green, social, sustainable, and aligned bonds for their adherence to the Spectrum criteria.

Stuart Kinnersley"Every investment made by AIM is evaluated and assessed by AIM's in-house dedicated verification team as having a clear environmental and/or social impact. All investments have been positively identified, using the AIM Spectrum criteria, to ensure transparency, good reporting, commitment to impact metrics, adherence to responsible investment principles, and consistent with our mandate to support climate action and the sustainable development goals," says CEO Stuart Kinnersley.

Spectrum is an acronym based on six key criteria. These are:

  • Sustainable – bonds must be aligned with a clear purpose to support the SDGs and Paris Climate Change agreement;
  • Positive externalities – positive environmental and/or social externality associated with the issuance;
  • Credit – issuers must be creditworthy from both a financial and broader ESG perspective;
  • Transparent – in reporting and disclosure;
  • Responsible – issuers should have strong integrity and standards, as well as a clear commitment to a sustainable business model;
  • Use of proceeds - ability to determine 'use of proceeds' to ensure funded activities meet the AIM criteria; and
  • Material and measurable environmental and social impact.

Using this process AIM has established a Spectrum universe of bonds in excess of $300 billion from more than 150 different issuers. From these, it has been able to generate mainstream returns, across various fixed income strategies.