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Green returns

In terms of the type of investment, green bonds are a natural choice for climate-conscious government bond investors. It’s a small but rapidly growing universe. According to research by Pictet Asset Management and the Institute of International Finance, the size of the sustainable bond market almost doubled in 2021. But the bulk of that growth came from corporate bond markets and the total amount of ESG-labelled debt accounts for only 2 per cent of the overall bond universe. By 2030, however, that proportion could be as high as a third, with particularly strong growth in emerging markets, the analysis shows.5

As well as its limited size (so far), the green bond market is hampered by a lack of universal rules and standards. Currently, the labelling and certification of sustainable bonds differs considerably from one country to another, while efforts to harmonise disclosure requirements haven’t met with much success. We expect to see increased standardisation as the green bond market deepens and increases in value. 

Given these limitations, we believe that a climate-focused sovereign debt portfolio shouldn’t focus exclusively on green bonds. It should also invest extensively in traditional bonds, which are in greater supply, are easier to understand and exhibit more attractive valuations. 

Focusing investments in the bonds of these nations may mean leaving out countries which are the mainstays of traditional bond indices. But that, in turn, increases diversification benefits for investors and should placate those who complain that funds that claim to embed environmental, social and governance (ESG) criteria are too often remarkably similar in their composition to non-ESG labelled ones.ky headsets, laggy connectivity and a lack of decent content held back the rise of those technologies. Advances in 5G mobile broadband and smartphones are changing that. “AR came out some time in the mid-noughties, and it didn’t really get anywhere because smartphones weren’t a thing. Then, suddenly, once smartphones came out, it all made sense,” says Alex Jenkins, creative director of the interactive arts division of Nexus Studios, a film and creative technology studio based in London and LA.

Today’s mobiles are kitted out with cameras and GPS, which make it possible to blend the real and digital. Their processing power and capabilities are increasing. Newer iPhones are equipped with LiDAR (light detection and ranging), a remote sensing tool which Jenkins describes as “a big game-changer for spatial computing.”

Today’s mobiles are kitted out with cameras and GPS, which make it possible to blend the real and digital. Their processing power and capabilities are increasing. Newer iPhones are equipped with LiDAR (light detection and ranging), a remote sensing tool which Jenkins describes as “a big game-changer for spatial computing.

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