In Search of Impact
The rising interest rate cycle and growing importance of sustainability-oriented strategies have been at the forefront of the fixed income market this year. Investors’ focus on sustainable investing has shown no signs of abating, despite the magnitude and speed of rate hikes.
One rapidly growing area in the sustainable finance space is green bonds, often referred to as impact finance. They are defined by the use of their proceeds, which are to be used for specific projects to make a direct impact in an environmentally friendly way, as defined by the International Capital Market Association (ICMA). The market at first was tapped by supranational borrowers such as the European Investment Bank and the World Bank, but now most issuers in this space are corporates (see Exhibit 1).
