LuxFlag – a sustainable finance grading agency – has awarded an ESG label to a social bond fund run by Columbia Threadneedle.
The company announced that the Threadneedle (Lux) European Social Bond fund had secured recognition from the labelling agency in a media announcement on Tuesday.
LuxFlag’s ESG label is awarded in recognition of funds that incorporate environmental, social and governance metrics throughout their investment process.
Sachin Vankalas, director of Operations and Sustainability at LuxFlag, explained the ESG label is awarded in recognition of a fund’s high standards following the “rigorous” assessment of a fund’s investment policies, processes and exclusionary criteria.
He said: “Threadneedle (Lux) European Social Bond Fund is a bond fund with an innovative social focus that unlocks the full potential of corporate bonds to deliver both financial and social returns.
“We are pleased to announce that the Threadneedle (Lux) European Social Bond Fund complies with the eligibility criteria of the label and therefore has been granted the use of the LuxFlag ESG Label for a period starting on 01 October 2018 and ending on 30 September 2019.”
The Columbia Threadneedle fund invests in bonds issued by companies, supranationals, and charities that engage in socially beneficial activities and development.
Fund managers assess the investments using a social rating methodology, and the positive impact of each investments is assessed in collaboration with sustainability group Inco.
Simon Bond, portfolio manager of the social bond fund said that the fund is the first daily liquid, regulated, socially beneficial bond fund in Europe.
“We believe you should expect a return for the risk you are taking whilst targeting social outcomes through a liquid conventional asset class,” he said.
“The market is providing an increasing number of opportunities, whether from agencies such as Council of Europe’s Social Inclusion bond (financing micro, small and medium enterprises, education and environmental protection) or from corporates such as Danone (with a social bond funding innovation in advanced medical nutrition).”