Federated Hermes has launched a climate change strategy for Australian investors in the fixed income space.
The Climate Change High Yield Credit Strategy aimed to generate long-term, risk-adjusted outperformance by investing in high-yield credit instruments and to support a low-carbon future.
It would use the Climate Change Impact Score to measure its progress and impact towards decarbonisation.
It would avoid holding companies where engagement on climate change had failed or heavy greenhouse gas emitting companies.
Fraser Lundie, head of credit, would be lead manager alongside Nachu Chockalingam as co-manager who had previously worked together on the Global High Yield Credit Strategy. They would be supported by a 12-strong team including Mitch Reznick, head of research and sustainable fixed income.
It was seeded by AP1, who had worked closely with Federated Hermes for a year to bring the fund to market.
Lundie said: “The global high-yield market offers great opportunities to identify attractive companies with the willingness and ability to change their operations, products or services in order to generate positive impact for the planet.
“This strategy is a natural extension of our existing credit offering and demonstrates our commitment to making a real difference for our climate and for future generations. We have always admired AP1 for setting a high bar when it comes to delivering long-term sustainable returns for its retirees and we are delighted that our pioneering and innovative approach to credit investing has enabled us to join forces one again.”
