Strategies & Capabilities

Target Climate Change in Your Bond Portfolio

Announcing Our New Sustainable Climate Bond Funds

Imagine if you could improve your bond portfolio’s carbon profile and reduce climate risk, while keeping risk and return characteristics broadly in place.

This is the rationale behind the State Street Sustainable Climate Bond Funds, which adopt a systematic mitigation and adaptation approach that targets Paris-aligned reductions in carbon emissions, fossil fuel and brown revenues exposure, and reallocates capital towards companies benefiting from low-carbon technologies. The Funds also increase exposure to green bonds, adapting companies and bond issuers investing in the solutions needed to achieve net zero by 2050.

The Funds aim to achieve the following objectives:

Our Four-step Investment Process

1. Start with the Right Universe
Clients can select any standard investment grade or high-yield credit benchmark or an aggregate benchmark which include corporate bonds. We first incorporate a set of screens that are aligned with our climate and ESG objectives. We then utilise three sets of exclusions based on product involvement and prescriptive regulatory screens.

2. Source the Best Data
We source the highest-quality climate and ESG data from leading data providers - Trucost, Climate Bonds Initiative, ISS ESG, MSCI, Sustainalytics and our internal R-FactorTM.

3. Design for Optimal Outcomes
We use a mitigation and adaptation framework to rebalance the portfolio towards companies that will achieve our stated objectives:

We then balance the portfolio to target the highest expected risk-adjusted return, given the desired constraints.

4. Maximise Value
The portfolio is implemented using an indexed approach to deliver a consistent, cost-efficient and diversified bond exposure.

Discover More

Further information on our Sustainable Climate Bond Funds can be found here.