Editor’s note: This article is part of a continuing series in which Paul Ellis, a well-known advisor and consultant on sustainable investing strategies, interviews industry professionals on the topics of millennials and sustainable investing. What follows is an interview with two industry experts from Community Capital Management: David Sand, chief impact investment officer, chief investment strategist and Jessica Botelho, director of shareholder relations. Please see the end of this article for links to other interviews in the series.
Ellis: David, there are a number of terms being used to describe sustainable fixed income investments, like green bonds, social bonds, market rate and below market rate bonds. How can advisors identify what strategies are appropriate for their clients?
Sand: At Community Capital Management (CCM) and as a fixed income impact investment manager, the test for us as to whether something is an impact eligible security is if we can do a use of proceeds analysis—can we look through the financial engineering to see what the underlying economic and environmental activity is that’s being supported by a potential investment?
Credit enhancement may be appropriate in a given situation, but transparency of data is always a key component and consideration. Advisors need to properly identify impact/sustainable investment opportunities by researching the product and managers, conducting due diligence and rigorously analyzing the financial and impact/sustainable components to ensure they meet their clients’ objectives.
Ellis: How has your work to get the word out about CCM’s fixed income sustainable and impact investment strategies been going?