Fidelity International has launched what it says is the first blue transition fixed-income fund globally, as part of its commitment to developing thematic solutions addressing climate change and social issues. Fidelity Funds 2 – Blue Transition Bond Fund will aim to support an approach which balances ocean, coastal and inland river system usage and resources with the conservation of healthy and productive marine and freshwater ecosystems. A minimum 80% of investments will be used to meet environmental and social characteristics promoted by the fund. Fidelity will look to achieve long-term growth and support the transition towards improved ocean and freshwater health by investing in global bonds and bonds of issuers which: align with at least one UN Sustainable Development Goal (SDG); use bond proceeds to finance projects benefitting ocean and freshwater-related sustainability; aim to improve management of water-related risks and opportunities; and reduce the negative impact of climate change on oceans and freshwater. Though they play a crucial role in regulating the climate, providing food and livelihoods and supporting diverse ecosystems, oceans and freshwater and are under threat and their protection is underfunded, Fidelity said. SDG 14: Life Below Water remains the least funded – not far behind SDG 6 on ensuring access to water and sanitation for all. “The bond market is uniquely positioned to help support the blue transition, given its size and greater number of issuers across both public and private entities in the corporate and sovereign issuer space,” said Kris Atkinson, Portfolio Manager at Fidelity. “We are particularly focused on blue bonds – a sub-component of the green bond market, which finance ocean and freshwater related projects. However, [those] alone are not sufficient for investors looking to support ocean and freshwater themes while aiming to generate attractive risk-adjusted returns.” Atkinson argued for a broader, more holistic approach starting at the issuer level, with investors considering how a company operates, which products and services it offers, and how these align to the blue transition.
