When it comes to ethical investing and funds that make a positive difference, most people would instinctively think of share funds. After all, we’re used to companies that are sustainable, and hence to like funds that invest in them. Fixed income and bond funds are often seen as rather dull with limited ways to make an impact.
But things are changing. Behind the scenes, there are a number of bond funds actively looking to support sustainability and make a real impact.
One of the core funds in our latest versions of our portfolios – currently being rolled out to clients – is the Trust Management ESG International Bond Fund. In a typical balanced portfolio it represents about 10% of the overall allocation. While issued by Auckland-based Trust Managements, the Fund invests in the Nuveen Global Sustainable Bond Fund. This is managed by Nuveen Asset Management, one of the largest fund managers in the world with US$1.4 trillion in funds.
Around half of the portfolio is dedicated to ‘impact’ bonds, which are aligned with four key themes: affordable housing, community and economic development, renewable energy and climate change, and the preservation of natural resources. The remainder is invested in ESG leaders.
All well and good. But what actual impact has the Nuveen fund had? To answer that question, Nuveen has measured impact across the four sectors and published the findings in its Global Fixed Income Impact Report. The latest report, to end 2024, shows both Nuveen’s commitment and its impact:
- More than US$10.3 billion of impact investments across 46 countries. US$1.9b invested in affordable housing, US$1.7b in community & economic development, US$4.3b in renewable energy & climate change, and US$2.3b in natural resources
- 987,612 affordable mortgages guarantee or provided
- 6 million people benefiting from access to basic products and services
- 143 million tonnes of Co2 equivalent emissions avoided
- 20 million people benefiting from clean water and wastewater projects
- Natural resources: 1.1 million hectares conserved, 1.5 million hectares restored or sustainably managed, 3.7 million metric tons of waste diverted from landfill, and 1.9 billion gallons (7 billion litres) of wastewater treated per day.
Social impact project examples include:
- Places for People, United Kingdom: A £500 million bond maturing in December 2041 financed affordable housing for low-income and homeless populations and energy-efficiency improvements to existing affordable housing. The report records 1,267 new affordable homes delivered and 695 homes receiving energy-efficiency upgrades in 2024.
- NWB, Netherlands: SDG Housing Bonds fund loans to Dutch housing associations for affordable housing, vulnerable groups, energy measures and neighbourhood quality. Nuveen held seven labeled NWB bonds at year-end 2024. NWB issued €2.9 billion of SDG Housing Bonds in 2024, supporting associations planning 180,910 social rental units between 2025 and 2029.
- IFFIm vaccine bonds: The bonds are backed by long-term, legally binding donor-government pledges and frontload future contributions so capital is available immediately for Gavi-supported vaccination programs. The report records 75 million children vaccinated through programs in 2024, more than 32.6 million girls fully immunised against HPV with Gavi support, and 58 vaccine introductions and preventive campaigns.
While no investment can solve every challenge, it’s encouraging to see that fixed-income investments can contribute to positive outcomes alongside financial returns. By choosing to invest ethically, our clients are helping direct capital towards organisations and projects that are working to create a more sustainable and equitable future.