How can you make a positive impact on people and planet while generating strong returns? Pensions for Purpose was delighted to partner on a masterclass hosted by Nuveen in London, exploring how to create impact through public fixed income.

Our CEO, Charlotte O’Leary, opened with reflections on systemic environmental, social and economic risks, before presenting the Impact Investing Principles for Pensions (developed with III & the GIIN) as a framework for pension funds seeking real-world outcomes.She shared how intentionally pursuing a positive impact helps investors learn about good and bad impact, and understand the risks and opportunities, often overlooked by traditional financial models. Businesses, too, are responding: the UK now leads in certified B Corp businesses, which are proving more resilient than their counterparts.  

This systems thinking was emphasised by Nuveen, who presented their approach to investing and measuring impact in public fixed income markets. Nuveen, whose philosophy is to 'invest like the future is watching', integrate impact across all investment products. The masterclass focused on the potential of public fixed income markets. Jessica Zarzycki led a discussion on tools, trends and innovations.

Our delegates raised questions: 

• Can fixed income be additional and impactful? 
• How do we make sense of the ‘alphabet soup’ of bond types?
• What can we factor in emerging markets? 
• Isn’t impact just standard practice for bond managers? 

Nuveen responded: 

• Is impact core to the manager or just a product line? 
• Can your managers think structurally/laterally? 
• Are they investing in systems transition? 

The panel explored bespoke solutions, ranging from blended finance to address regional challenges, the risks of impact-washing and superficial SDG alignment, issues which regulatory frameworks like SFDR and SDR aim to address. Nuveen made the case for building an investment thesis that aligns with an impact thesis – not as a trade-off, but a driver of long-term value. 

Nuveen covered the potential of impact in public bonds, from green bonds to orange bonds and back again, with transparent views about the issues. They addressed the need to approach unique challenges, such as emerging markets, with unique solutions, such as blended finance. Impact incentivisation was another interesting area covered, requiring deep knowledge of the market, investor types and the geopolitical environment. They also inspected ways in which blended finance and other innovative approaches are catalysing financing in the green, social and sustainability market.

The VR headset experience took attendees through the Amazon rainforest. Nuveen is the largest global investor in Amazon reforestation, supporting the activities of Brazilian-based carbon removal company, Mombak to reforest up to 3,300 hectares of Brazil.

Conclusions

Many attendees left with a new perspective on green bonds and impact, and the potential for financing impact via public fixed income. That new mindset is exactly what Pensions for Purpose exists to support, encouraging our members to rethink the possible.

Awareness and understanding are often not the same thing. It is easy for those who work in the impact investment space to think this all just makes complete sense to us and the job is done. The reality is we need to connect the dots on a hugely complex set of issues that are interconnecting and interdependent.

Thanks to our speakers Sophie Ballard, Jessica Zarzycki and Tony Appiah of Nuveen, and our delegates.

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