Credit and carbon – navigating complexity

Matthew Franklin, Fund Manager at Royal London Asset Management, discusses the growing interest in carbon within investment portfolios and how he sees the market evolving over time.

Why are we seeing such a growing focus on carbon within investment portfolios?

There is an enormous focus from financial markets on decarbonisation and we see three key forces driving this. The first is societal – the massive shift that we have seen building over time as people become increasingly aware of the impact we have on the planet and are demanding change as a result.

The second is more formal – through legislative changes, such as requirements on pension funds to give greater focus and disclosure around carbon emissions, which then feeds through to asset managers. And third, interestingly, I think there is also growing decarbonisation interest even amongst investors not explicitly concerned with the climate. As the yield of a bond increasingly reflects perceived environmental performance, these investors are keen to be the right side of future market moves.

Read in full: Credit and carbon – navigating complexity

The views expressed are those of the author at the date of publication unless otherwise indicated, which are subject to change, and is not investment advice.