Sustainability Knowledge Center
Sustainable government bonds: why not?
Due to the euro crisis, many countries have lost their status as risk-free assets. This has demonstrated the importance of integrating sustainability criteria when making decisions about investing in government bonds. Government debt remains a major investment tool, currently representing nearly €58 trillion, and it may considerably leverage the financing of the energy transition.
What exactly are we talking about?
Assessing the sustainability of countries may seem complicated. However, various approaches exist. We need to choose quantitative and/or qualitative criteria to assess the sustainability of countries.
Should we focus on whether countries live up to international treaties and agreements?
Should we listen to the various NGOs, which are critical of a country’s environmental and/or social commitments?
Should we define sustainability criteria, based on the statistics of various international agencies which enable objectivity and comparability, but which are based on historical data?
The carbon risk must not be underestimated
The carbon risk constitutes an economic risk in the mid and long term. Legislation is becoming increasingly strict to take account of this. Besides the carbon intensity and energy efficiency of a country, how should we assess the global risks that confront countries?
An approach which is even more relevant for the future
It is clear to see that we are currently facing a paradigm shift, in all three dimensions of sustainability: environment, social and governance.
Because of this paradigm shift, it has become more important than ever to integrate sustainability criteria when investing in governments.
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