GBP260 billion Aviva Investors is one of the gorillas of the investor world. Speaking at Monday's Environmental Bonds conference in London, Aviva's Head of Instituional Credit, Colin Purdie had this to say:
Fiduciary duty requires that when we are made aware of an issue we must act and in a manner that is in the best interests of our clients.
Clearly, climate change is one such issue. Failing to acknowledge, address and mitigate the significant economic risks raised by climate change, I believe, means a failure to meet our fiduciary duty. As such, investment managers should be required to act in order to mitigate the consequences of climate change.
And ....
For the sake of the green bond market the move towards green bond standards is very clearly a positive step.
From the perspective of a mainstream fund manager it is important to recognise the important role that green bond standardisation could play.
Most analysts and fund managers in the bond market do not have the time, skills or motivation to determine environmental impact. As such, if they were required to make the determination, they would likely evade the task and ultimately defer investment purely on this basis.
Industry recognised standards being in place would remove a very important limiting factor on mainstream bond investment.
And ...
The development of green bonds as a legitimate funding tool to attract significant mainstream investment in climate change initiatives is extremely welcome.
No longer is there a requirement to pitch funding ideas solely to niche SRI funds which is a relatively shallow pool of capital and insufficient to meet the investment now required to arrest the pace of climate change.
The mainstream bond market has the size and demand to meet a significant proportion of the funding required. As such, institutions such as Aviva Investors stand willing and able to fund these initiatives, so long as we do so in a more reliable policy environment.
