Sustainable Investment Awards 2022

ESG fixed income fund of the year, North America: Brown Advisory

Brown Advisory secured the ESG fixed income fund of the year award in North America for its Tax-Exempt Sustainable Bond Fund in recognition of its role supporting the development of sustainable US municipal bond markets.

Launched in 2014, the $250 million fund – which invests at least 80% of its assets in US tax-exempt bonds – was an early adopter of the Green Bond Principles and has developed its own proprietary ESG risk and opportunity assessment methodology for municipal bonds which is focused on the issuer level rather than the instrument.

The judges recognised the materially important role the fund has played in the development of the US muni sustainable bond market since its inception. For example, Brown regularly participates in the CDP Municipal Disclosure Campaign by providing other investors with a list of muni issuers which have not yet provided CDP questionnaires in order to support their engagement programmes.

Brown said this initiative "helps to improve the environmental disclosures available in the municipal space, and sends a strong message to issuers on the importance of transparency to investors".

The US muni bond market offers a "unique" impact opportunity for investors, according to Brown Advisory, due to its diverse issuers – including meaningful investment in health, education, housing, and clean transport services.

Nonetheless, Brown emphasised the fund does not see muni bonds as having an "inherent" sustainability impact. Although muni bonds can meaningfully improve sustainability, diversity, equity, and inclusion they can also negatively impact such aims when "improperly structured".