New Investment Strategy Focusing on Environmentally Beneficial
Development
BOSTON--(BUSINESS WIRE)--
State Street Global Advisors (SSgA), the investment management business
of State Street Corporation (NYSE: STT), today announced its new High
Quality Green Bond strategy which offers investors a way to direct fixed
income investments to climate solutions.
Issued primarily by the World Bank, European Investment Bank, and other
supranational and multilateral development banks, green bonds allocate
the proceeds of the bond offering to fund environmentally beneficial
development projects. In the past two years, the nascent green bond
market from these issuers has grown from $1 billion to $5 billion
outstanding. Overall, the estimate from all issuers of green bonds is
approximately $12 billion¹.
“Investment managers are being asked more frequently by their clients to
consider sustainability and environmental factors in their approach to
the market,” said Chris McKnett, head of environment, social and
governance (ESG) investing at SSgA. “The development of a green bond
strategy as a complementary solution to our other ESG investment
offerings was driven by increased market demand amongst investors.”
SSgA’s High Quality Green Bond Strategy seeks to approximate the
duration of its duration benchmark – the Barclays Capital U.S. Treasury
Index² – through investments principally in green bonds and other debt
instruments.
Brian Kinney, global head of SSgA’s Fixed Income Beta Solutions
commented: “This new offering is not only a significant milestone within
our expanding line up of ESG investment solutions but also presents
investors with a solid investment option as part of their overall fixed
income allocation.”
SSgA will primarily invest in green bonds issued by supranational or
multilateral development banks. These green bonds have similar financial
features to standard bonds issued by these same organizations. They are
of high credit quality and come from reputable issuers that are backed
by large balance sheets and known institutions.
Eligible green bond issuers undertake extensive due diligence with the
aim of financing projects that provide positive economic and
environmental benefits. Projects financed by green bonds generally fall
into one of two categories: those seeking to mitigate climate change or
projects seeking to adapt to its effects.
"With the immense amounts of financing needed for countries to support
their climate mitigation and adaptation activities, initiatives like
green bonds that help raise funds from the private sector and increase
awareness for these challenges are vital,” said Andrew Steer, Special
Envoy for Climate Change, World Bank. “We welcome SSgA's efforts to
provide their clients with fixed income products that help raise
financing for climate solutions, and are happy to have played a
catalytic role to the growth of the green bond market."
With more than $122 billion in overall ESG assets³, SSgA is one the
world’s largest managers of ESG investments. The High Quality Green Bond
Strategy is supported by the ESG team, comprised of five professionals
with an average of eight years of experience overall and four years in
an ESG capacity.
State Street is one of the world’s largest fixed income managers with
$306 billion in assets4.
About State Street Global Advisors
State Street Global Advisors (SSgA) is a global leader in asset
management. The firm is relied on by sophisticated investors worldwide
for its disciplined investment process, powerful global investment
platform and access to every major asset class, capitalization range and
style. SSgA is the asset management business of State Street, one of the
world's leading providers of financial services to institutional
investors.
¹SSgA, Climate Bonds Initiative
²The Barclays U.S. Treasury Index is a trademark of Barclays Capital,
Inc.
³June 30, 2011
4 September 30, 2011
Investing involves risk including the risk of loss of principal.
Bond funds contain interest rate risk (as interest rates rise bond
prices usually fall); the risk of issuer default; issuer credit risk;
liquidity risk; and inflation risk.
Derivative investments may involve risks such as potentially illiquidity
of the markets and additional risk of loss of principal. There are a
number of risks associated with futures investing including but not
limited to counterparty credit risk, currency risk, derivatives risk,
foreign issuer exposure risk, sector concentration risk, leveraging and
liquidity risks.
CORP-0407
State Street Corporation
Marie McGehee, +1 617 664 1898
www.statestreet.com
Source: State Street Corporation