Climate Change
High Yield Credit

Seeking to deliver a positive climate impact alongside long-term outperformance.

Reasons to invest

Benefitting the planet

The strategy’s dual objective looks to deliver strong financial performance and a positive environmental impact through decarbonisations.

High conviction, flexible approach

We target companies with strong fundamentals – investing across geographies, instrument types and credit curves.

Climate change measurement

Our proprietary internal scoring framework conveys a company’s progress towards the low-carbon transition.

Pushing for climate impact

Engagement encourages companies to pursue decarbonisation commitments, with the potential for material, positive impact.

Investment expertise

The principal members of the investment team have worked together since 2004 to deliver attractive high-yield credit returns.

Client-driven real estate

Drawing on 40+ years of experience, we seek to deliver future-focused real estate solutions which adapt to our clients’ needs or requirements, across all market conditions. We are adaptive, agile and our long track record is built on deep relationships and networks which position us to access some of the best market opportunities on behalf of our clients. We are looking to the future of our industry and how we can best effect change in the built environment to deliver sustainable, long-term outcomes for our investors via the creation and ongoing management of relevant and resilient real estate.

Images: Investing across the Office, Industrial and Retail Sectors

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Overview

Fraser Lundie

Through high-conviction investment in companies with both strong fundamentals and the potential to transition to a low-carbon world, we target financial outperformance and a positive impact.

Fraser Lundie, CFA
Head of Fixed Income - Public Markets

Why Climate Change High Yield Credit?

The strategy aims to outperform the global high-yield market through high-conviction investment in companies with strong fundamentals that also demonstrate the potential to decarbonise and transition to a low-carbon world.

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We seek companies that have the willingness and ability to make a positive impact on the planet. Investors can gain exposure to the high-yield market and support the transition to a low-carbon economy.

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We exclude companies involved in activities that we believe to be unsustainable or unethical.
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How we invest

High-conviction process
Climate change measurement
Active engagement to bring about change

Investment philosophy

Investment philosophy

Our twin objectives are to deliver:

Strong financial performance
Positive climate impact through decarbonisation

We believe these aims are interwoven and self-reinforcing.

Investment process

Climate Change High Yield Credit-investment process-infographic

We begin with positive and negative screens. The negative screen excludes fossil fuels, tobacco, controversial weapons and companies in contravention of the principles of the UN Global Compact, as well as companies with a Climate Change Impact (CCI) score of 5. CCI scores measure a company’s decarbonisation in terms of progress and impact (the latter referring to the contribution the company makes to decarbonising the economy through its operations and products).

The positive screen selects innovators; companies with science-based targets; genuine transition stories encouraged by engagement and green bonds.

We assess the company fundamentals, scoring their operating, financial and ESG strengths based on analyst and engagement insight. Concurrently, our Sustainable Fixed Income team analyses the materiality of the company’s climate change agenda and assigns our CCI score.

Once we have established the company’s fundamentals and climate change agenda, we will identify which instrument within the capital structure it is best for us to use. Our analysts will produce a score for value.

Team

6207, 6291

Nachu Chockalingam, CFA

Senior Credit Portfolio Manager, Federated Hermes Limited

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Product information

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