As a reminder of the difference, equities are stock market listed companies, and investors own part or a share of the company they invest in, whereas bonds are a loan made by an investor to a borrower. Our 'A - Z of Impact Investing' has some more background information.
Investment with an ethical focus started in the 1970s with the industry growing and developing throughout the decades since. With the arrival of the Coronavirus pandemic, there’s been a documented surge in demand for investment opportunities with organisations that prioritise respect for the environment and quality of human life.
Whilst bonds are the dominant asset type throughout stock market investing in general, they make up a relatively small proportion of the impact investment market. There are currently 562 impact funds raising capital, with more than EUR 100 billion being raised in the private market, but only 5% of these funds are being raised for listed fixed-income products like bonds.
This deficit not only leaves investors short of opportunity, but also acts as a bottleneck preventing organisations receiving the finance they need to grow their positive environmental, social or cultural agendas.
The new Triodos Sterling Bond Impact Fund aims to bridge this gap between positive impact organisations in need of finance and investors looking to build a better future. All organisations included in the fund will contribute to Triodos Investment Management’s seven sustainable transition themes, in line with the United Nation’s (UN) Sustainable Development Goals (SDGs).
This is the first Triodos Impact Investment Fund to be offered in sterling, so returns aren’t subject to the GBP/EUR exchange rate. The new fund complements the equity-based Triodos Global Equities Impact Fund and Triodos Pioneer Impact Fund to offer a more diverse portfolio to UK-based investors. It is expected to have a risk rating of 3/7, which may appeal to first-time or more conservative investors, or simply those that wish to balance out their portfolio with some lower-risk assets. As with all investments, returns are not guaranteed, and capital is still at risk.
"For us, this product is pivotal in aiding the growth of impact investing in the UK – the crucial piece in the puzzle", Griffiths continues. "Without it, the industry simply can’t scale and that is vital to encouraging more people to invest in the future of the planet.”
As with all the impact funds, Triodos Investment Management will continue to use its influence to hold organisations accountable to their sustainability targets. At Triodos, active stewardship begins from the moment of company assessment, and evolves through dialogue as the relationship grows.
We can’t achieve a more sustainable future alone – but through the collaboration of investors, investment management, and pioneering organisations, there is an opportunity to forge a path that delivers environmental security and human dignity for all.
As with all investments, your capital is at risk – investments should be regarded as for the long term as their value can go down as well as up, currency fluctuations can affect the value of your investment and you may not get back what you put in.
You should ask an independent financial advisor if you're unsure which investment is right for you. Triodos Bank doesn’t offer financial advice.
Triodos Sterling Bond Impact Fund
Invest in a range of bonds issued by sustainable companies and gilts issued by the UK government.