While global interest in ESG investing has been on the increase for over three decades, it has recently spread beyond its traditional domain of the equity markets to other asset classes, including fixed income. Several factors have contributed to this development, such as the increased support from policy makers, greater corporate disclosure and increased coverage by ESG data providers.
The increased availability of ESG data and ratings has enabled several important innovations in the fixed income space like green bonds and social bonds. There have also been new collaborative efforts, such as the one between UBS and the World Bank providing low risk sustainable investment alternatives to high grade fixed income investments. Subsequently, the rise of these innovative solutions has allowed investors to allocate more private capital to sustainable fixed income instruments.