Stockholm (NordSIP) – Fixed income managers with solid sustainability credentials are few and far between. They are also in high demand these days. It was, therefore, understandable that the news about sustainable fixed income expert Erika Wranegård deciding to join Lombard Odier Investment Managers quickly spread across the investment community earlier this week. Wranegård has made a name for herself not just as the person behind integrating ESG within Swedish asset manager Öhman’s fixed income strategies, but also as an active member of the PRI Advisory Committee on Credit Risk and Rating and the Advisory Committee for Green Assets Wallet, the world’s first blockchain platform for validation and reporting of financial impact.
NordSIP took this opportunity to reach out to Wranegård and hear more about her new role at LOIM. Alongside Ashton Parker, Denise Yung and Jérôme Collet, she will be managing the firm’s TargetNetZero Global and European Investment Grade credit strategies, currently boasting assets under management of more than CHF 270 million. Given her expertise, she would also be expected to help further integrate sustainability into the existing corporate strategies of the fixed income team.
The first thing we find out is the reason Wranegård has chosen to join LOIM at this point in her career. The firm’s high ambitions and academic sophistication within the field of sustainable investing sealed the deal for her. “I have been following the research of Dr Christopher Kaminker, Head of Sustainable Investment Research & Strategy, for several years,” she confesses. “In parallel, I’ve been following the work of Dr Ben Caldecott, founding Director of the Oxford Sustainable Finance Programme, ever since I attended a presentation that he gave on geospatial data analysis and climate risk in 2018.” And then, she learned that Lombard Odier and the University of Oxford had launched a new multi-year partnership to foster research and teaching on sustainable finance and investment, with a particular focus on climate change, circular economy, and nature. It was, therefore, not a surprise that Wranegård jumped at the opportunity to join an organization exhibiting thought leadership in an area that she is passionate about.
“One of the things I am most excited about is Lombard Odier’s Portfolio Temperature Alignment tool, LOPTA,” Wranegård tells us. “LOPTA offers investors a clear view of the risks and opportunities inherent in the climate transition and enables them to focus on companies aligned with the Paris Agreement. The tool gives investor best in class opportunity to align portfolios to the Paris Agreement. I’m excited to work with such an innovative team and continue developing new innovative investment solutions for clients.”
ESG integration in fixed income has come a long way in the past few years yet still significantly lags the integration in equity portfolios. Having an expert at hand, we take the opportunity to pick her brain on why she thinks this is the case. “Bridging the gap between different fields and areas of expertise has been the biggest challenge for the market,” claims Wranegård. According to her, it is not just the lack of data that is the problem, but the lack of knowledge and assessment skills. “Data is a big challenge, but not the only one. It takes a detailed understanding of inherent sustainability risks to know which data points are needed to assess the risk an investment is exposed to. I’d say that has been, and still is, the biggest challenge, which is why PRIs work on ESG risks in credit risk and ratings has been and is helpful for the market,” she explains.
Wranegård started her professional career at Morgan Stanley in London. After spending some years in Stockholm, she is now looking forward to living and working in an international environment once again. “But of course, I will miss Sweden and the Nordic sustainable finance market,” she muses. “Many times, I have been amazed by the dynamic collaboration between industry peers in the Nordics, driving forward the field of sustainable investments. The knowledge sharing enables innovation which in turn further strengthens the Nordic region’s leadership in sustainable finance. I do believe that is unique to the Nordic market.”
Looking forward, she sounds quite optimistic about the asset management industry’s stride toward sustainability. “Mainstream capital needs to move, and we can already see it is starting to happen,” she says. “When mainstream capital aligns portfolios to the Paris agreement, it could result in a sudden fall of asset values. You want to be positioned for that move. That is why I am very excited about the investment opportunity LOIM TargetNetZero strategies offer clients,” she concludes.