Lorenzo Brunelli, ESG product strategist at PIMCO
PIMCO believes it is critical that a well-rounded sustainability strategy shouldn't be limited only to ESG-labelled debt, even in the context of an ESG-optimised thematic strategy like the PIMCO GIS Climate Bond Fund.
"That would be sub-optimal because you would be missing a number of interesting opportunities in bond markets, especially from those issuers that are not in a position to issue dedicated instruments or use-of-proceeds bonds with a certification," says Lorenzo Brunelli, ESG product strategist at PIMCO.
These segments could be unlabelled green bonds or they could be climate leader bonds, both of which are critical categories for PIMCO's Climate Bond Strategy - a multi-sector thematic bond portfolio that invests beyond the green bond market.
Unlabelled green bonds are issued by companies that are structurally low carbon, for example a solar panel company or an electric passenger railway company.
"These are pure play or almost pure-play type of companies, and while they may not issue green-labelled, certified bonds, their businesses are nevertheless important to support the transition to a low carbon economy," says Brunelli.
As for climate leaders, PIMCO defines them as issuers deemed to be at the forefront of net zero transition in sectors that are not structurally green.
"These are issuers that are demonstrating a strong commitment to mitigate their carbon emissions at company level across the full value chain, encompassing the reduction of their environmental impact overall," Brunelli says.
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