Sydbank culls 18 percent of EM universe and beats regular benchmark

Applying ESG filters to sovereign bonds is no easy task. Doing the same thing in emerging markets is even more difficult -- with the regions more vulnerable to ESG issues and local institutions typically less developed. Still, the EMD team at Denmark's Sydbank has taken on the challenge.

Emergin markets with a green touch | Photo: Shutterstocks

Back in 2016, Sydbank’s emerging markets debt team got a request from a small Swiss pension fund. The Nest Sammelstiftung, which describes itself as an ecological-ethical pension fund, asked the Danish asset manager for an ESG-screened product in emerging markets sovereign bonds. Not an easy task, Christian Farø, Senior institutional sales manager at Sydbank explains to AMWatch.

“Basically, Nest wanted stricter governance demands in relations to freedom rights, weapons and other things. They wanted a tighter sanction universe. And this means that 24 countries are now on our non-investable list in EM for this particular fund,” Farø says.

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