Investment in socially responsible government bonds: Developed market sustainability update 2022

Research report

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Developed market sustainability update: 2022

Abstract

KBC takes a wide range of sustainability indicators into account when screening countries for its SRI (socially responsible investment) bond funds. In this research report we present the results of the latest update (made end-2021) for the group of developed countries. We also give an overview of the screening methodology, as well as the way we select countries for the SRI investment universe.

The Scandinavian countries and Switzerland continue to occupy the first five places in the country ranking (otherwise known as the 'KBC Sustainability Barometer for Developed Markets'). The Netherlands and Germany also score very well with a 6th and 7th place. Ireland and Croatia move up the most in the updated ranking, while Hungary has lost the most places. Belgium drops two places to 16th in the ranking of 44 countries considered. 

The 70% best scoring countries in the screening are in principle eligible for KBC's SRI investment universe. However, we apply an additional number of exclusion criteria. Countries with an overall score above the 70% cut-off point but which are in the 10% worst performing countries for one of the five screening themes are still excluded from the SRI universe. Countries that do not meet one or more criteria of the Central Labelling Agency are also excluded. 

In the end we are left with 21 countries in the universe in which KBC's socially responsible funds can invest. In order of score in the screening (from high to low) these countries are: Denmark, Norway, Sweden, Switzerland, Finland, Netherlands, Germany, UK, Austria, Ireland, France, Belgium, Luxembourg, Slovenia, Portugal, Estonia, Czech Republic, Spain, Lithuania, Slovakia and Italy.

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Disclaimer:

Any opinion expressed in this publication represents the personal opinion by the author(s). Neither the degree to which the hypotheses, risks and forecasts contained in this report reflect market expectations, nor their effective chances of realisation can be guaranteed. Any forecasts are indicative. The information contained in this publication is general in nature and for information purposes only. It may not be considered as investment advice. Sustainability is part of the overall business strategy of KBC Group NV (see https://www.kbc.com/en/corporate-sustainability.html). We take this strategy into account when choosing topics for our publications, but a thorough analysis of economic and financial developments requires discussing a wider variety of topics. This publication cannot be considered as ‘investment research’ as described in the law and regulations concerning the markets for financial instruments. Any transfer, distribution or reproduction in any form or means of information is prohibited without the express prior written consent of KBC Group NV. KBC cannot be held responsible for the accuracy or completeness of this information.

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