Climate change and bond portfolios

Presented by

Kris Atkinson, Robert Rosenberg, and Elisabeth Vishnevskaja, Fidelity International

About this talk

Did you know that climate bankruptcies are already a reality? Surprisingly many people still believe climate change is a “feel good” topic that may have an impact long into the future. However, in practice the socioeconomic and financial effects of climate change are already observed today, for example through the direct impact of physical phenomena such as wildfires and heatwaves. In addition, as the global economy is re-wiring to tackle the issue of climate change through regulation or market players revisiting their long-term priorities, understanding how these dynamics will impact markets is extremely important. As we prepare for the next United Conference on Climate Change (COP 26) next year, we can expect an increased sense of urgency as we take stock on the effectiveness of our society’s global response to the threat of climate change so far. Fixed income markets are part of the solution, but how exactly to incorporate climate change in fixed income portfolios is not straight forward at all. The objective of this session is to provide a mini guide on common pitfalls and recommendations when incorporating better climate risk management in bond portfolios. During this session we will cover: - Why incorporating climate change makes sense in fixed income space - Challenges of current approaches available in the market - Balancing environmental sustainability and returns: is there a tradeoff? - Introducing the Fidelity Reduced Carbon strategy The audience can expect to take away useful tips in how to better incorporate climate risks in their fixed income allocations, and what are best practices to watch out for. They will also get an introduction to the Fidelity Reduced Carbon approach with examples of climate risk integration into the investment process.

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