Fidelity International has launched a blue transition bond fund to help improve ocean and freshwater health. The Fidelity Funds 2 – Blue Transition Bond fund is a fixed income instrument that will invest a minimum of 80% of its assets in bonds or bonds of issuers that support the transition towards improved ocean and freshwater health.
The bond will also invest a minimum of 20% in sustainable investments of which 1% have an environmental objective that is aligned with the EU Taxonomy; a minimum of 10% have an environmental objective that is not aligned with the EU Taxonomy; and a minimum of 5% have a social objective.
Fund manager Kris Atkinson said, “We are particularly focused on blue bonds, a sub-component of the green bond market, which finance ocean and freshwater-related projects. However, blue bonds alone are not sufficient for investors looking to support ocean and freshwater themes while aiming to generate attractive risk-adjusted returns. A broader, more holistic approach needs to start at the issuer level; investors should consider how a company operates, which products and services it offers, and how these align to the blue transition.”
Though the oceans cover more than 70% of the planet and planetary health depends on healthy oceans, United Nations Sustainable Development Goal 14, “Life Below Water” has the least funding currently of any of the SDGs. Oceans are responsible for absorbing 30% of CO2 and 90% of the heat from climate change, providing food and water, and enabling transportation and other environmental services.
The USD fund determines sustainable investments as investments in securities of issuers making a substantial contribution through their economic activities to:
One or more of the environmental objectives set out in the EU Taxonomy that qualify as environmentally sustainable in accordance with EU Taxonomy; environmental or social objectives aligned with one or more of the SDGs; a decarbonization objective consistent with maintaining the global temperature rise to below 1.5 degrees; or bonds that intend to use the majority of proceeds for specific activities, assets or projects that contribute to environmental or social objectives.
