Investing in country bonds

23-06-2010 | Investing in country bonds has not traditionally been part of the Triodos Bank vision for our sustainable investment portfolios. Within the boundaries of a risk-return profile in line with the market, we aim for engagement with the companies that we invest in. From a financing position, we want to raise awareness and stimulate greater sustainability among the companies in our portfolios through ongoing dialogue and in shareholder meetings. When investing in country bonds, this strategy is impossible and even undesirable because a government should be supervised and influenced only by its citizens through democratic processes.

As a result of the recent strengthening of our sustainability criteria, there are fewer options for investing in the company bonds traditionally issued mostly by financial institutions. This change has compelled us to shift our strategy in order to protect the interests of our customers; investing in country bonds guarantees sound spread and liquidity in the bonds portfolio. This decision is reinforced by the poor liquidity of company bonds and the volatility of the capital market as a result of uncertainty about both companies and governments.

As of April 2010 country bonds may appear in the investment portfolios managed by Triodos Bank. We keep the relative weight of these investments as small as possible for the reasons mentioned above. We developed a methodology for the selection of countries that are eligible for investment based on the mission of the United Nations and various UN conventions. This methodology is also closely attuned to our vision on the functioning of governments and the protection of the interests of their citizens.

Step 1: Countries must be free of boycots supported by the United Nations.

Step 2: Countries must belong to the fifty best functioning democracies within the group of 100 largest economies. 

Step 3: Countries must underwrite the most important, broadly supported conventions of the United Nations.

In the portfolio of the Triodos Sustainable Bond Fund you will find the countries we currently invest in. 

Note: The issues explored in this article are specifically relevant to sustainable investments on the stock market. Triodos Bank believes that our Socially Responsible Investment funds are a powerful means of promoting our values and working for greater sustainability, while enabling us to offer a complete range of attractive investment options to customers that choose to invest on the stock market.