Sustainable Investment Awards 2023

ESG fixed income fund of the year, global: Abrdn Climate Transition Bond Fund

The $100 million Abrdn Climate Transition Bond fund has secured the global ‘ESG fixed income fund of the year award’, after being particularly praised for its focus on climate adaptation.

The fund – launched in 2021 – includes three key pillars in its climate transition framework: climate leaders, adaptors, and solutions. The inclusion of climate adaptation is a feature that abrdn described as “unique” to its fund and is an aspect that impressed Environmental Finance’s Sustainable Investment Awards judging panel.

Thomas LeysAbrdn investment director Thomas Leys – who manages the fund – told Environmental Finance the adaptation aspect is an “oft-neglected” part of the climate investment world, but companies need to do more to disclose physical climate risk to support further adaptation finance flows.

“For adaptation finance to become more widespread, company reporting needs to improve,” he said. “Exposure to physical risks in company supply chains should be reported and assessed, particularly among those firms with a large reliance on natural resources and those with large physical asset footprints.”

Leys said it was also important that the fund was focused on delivering real-world emissions reductions – hence its focus on climate leaders.

“This is not just another low-carbon fund that rotates into low-impact sectors,” he said. “In fact, one of our three investment pillars actively seeks high emitting companies that have ambitious and credible decarbonisation plans.”

This focus has resulted in the fund’s holdings driving decarbonisation at nearly twice the rate of the benchmark by 2030.

“There are lots of low-carbon funds in the market that have achieved carbon footprints significantly below the benchmark simply by tilting into sectors that actually have little to do with the transition to a low-carbon economy. We think the market needs to focus less on lowering portfolio emissions and more on lowering real-world emissions.”

Key facts (as of 30 April):

Fund name: Abrdn Climate Transition Bond
Assets under management: $100 million
Launched: 14 June 2021
Number of holdings: 140
Benchmark: 60% Bloomberg Global Aggregate Corporates Index; 20% Bloomberg Global High Yield Corporates Index; 20% JP Morgan Corporate Emerging Market Bond Index

Top 10 Holdings:

  CompanyPortfolio Weight 
1 Stagecoach (4%, 2025) 2.6%
2 Lima Metro Line 2 Finance (5.875%, 2034) 2.4%
3 TenneT (2.374%, Perpetual) 2.2%
4 Manila Water (4.375%, 2030) 2.1%
5 Go-Ahead (2.5%, 2024) 1.9%
6 Greenko Wind Projects (5.8%, 2025) 1.8%
7 Maf Global Securities (7.875%, Perpetual) 1.7%
8 India Green Power (4%, 2027) 1.7%
9 Republic Services (1.75%, 2032) 1.7%
10 Sociedad De Transmission (4%, 2032) 1.6%