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Giving credit to decarbonisation (part 1)

What are the hallmarks of best-practice carbon disclosures among corporate-bond issuers, and how can climate action positively impact the performance of companies?

In episode 13 of Delta, our fixed-income podcast, we assess the progress made in disclosing and reducing carbon emissions throughout the corporate credit and real-estate debt sectors.

In the first instalment of this two-part episode, recorded on 29 June, we focus on corporate credit markets do discuss the hallmarks of best-practice disclosure and the link between climate action and returns.

Discussing progress across sectors, highlights examples of best practice:

“The leaders tend to allocate capital to activities that improve their carbon footprints,” says Nachu Chockalingam, Senior Credit Portfolio Manager. She highlights examples: an energy company that has made carbon reduction core to its corporate policy and a cement manufacturer that monetised a surplus of carbon credits in Europe.

“We do find that there is a very positive correlation between action that companies are taking on climate change, and in terms of returns,” Chockalingam says.

Aaron Hay, Lead Engager – Fixed Income, says the most committed firms set robust emissions-reduction goals for 2030 instead of 2050. This ensures that current management teams are accountable for making progress.

“The leaders have 2030 targets that are science-based, specific to their sector and validated by third parties,” Hay says. “They have milestones set and are focused on the full scope of emissions – both in their business and across the value chain.”

Why should fixed-income investors give credit to decarbonisation? To find out, tune it to Delta.

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