Impact investing involves the measurement and reporting of the impact of environmentally and socially conscious investments. Traditionally, impact strategies have traditionally been smaller in scale - however, this trend is changing.
Tammie Tang, the portfolio manager leading Columbia Threadneedle Investments' pioneering social bond strategies, explains that when they first ventured into impact investing to address social inequality and deprivation, the social bond universe was nearly non-existent.
Yet, it has already been a decade since the successful launch of the UK's first daily liquid bond strategy, the CT UK Social Bond Fund in 2013. This was followed by the 2017 launch of the CT (Lux) European Social Bond, Europe's first daily liquid social bond fund.
Today, the market has grown substantially, and as of June 2023, Columbia Threadneedle manages more than €1bn within its social bond strategies.
Andrew Brown, portfolio manager within the team, explains: "Essentially, they are all trying to do the same thing - it is all about how you can enable the bond market to generate positive social outcomes or impacts. It is very well positioned to do so because the bond market is the largest asset class, at roughly $130trn - and in many cases those organisations doing the most impactful work are not able to issue equity, such as development banks, agencies and charities."
Tang says: "Now people understand, thanks to better literature and access to academic work, the problem of social inequality. We do not accept that unequal societies are likely to give us happy, satisfied people with good well-being, stable community, and politics. By targeting better outcomes for people in need, we seek to benefit and support not just them but all of society."
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Sources.
(1) Columbia Threadneedle Investments, 30 June 2023
(2) thegiin.org
