While fixed income is the world’s largest asset class, it is not commonly recognised for investments making social or environmental impact. But a recent report explains why investors should look more closely at fixed income assets and catastrophe bonds are highlighted as one impact investing opportunity within the segment.
The report comes from a research collaboration between Builders Vision, an investor and philanthropist team that looks to accelerate impact solutions and counts the Walton family office as a backer, Tideline, a consultancy that works to catalyse the development of the impact investing market, and BlueMark, a verification and intelligence provider to the impact and sustainable investing market.
Catastrophe bonds and other insurance-linked securities (ILS) have long been cited for their ability to generate real impact in society, through their ability to transfer natural disaster and weather risk to the capital markets, while payouts from the instruments go towards insurance claims, paying for reconstruction and redevelopment after catastrophe strikes.
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