Fixed income carbon transition
The move to Net Zero presents new risks and opportunities for investors. Our years of experience and depth of knowledge in both responsible investing and fixed income mean that we are able to offer clients a pragmatic approach to sustainability to help them achieve their traditional financial objectives as well as their environmental goals.
Why invest in carbon transition fixed income?
A resilient fixed income approach
A pragmatic approach to sustainable investing to help you achieve your traditional financial and sustainable objectives.
Built on experience and expertise
We have 30 years’ experience developing innovative, outcome-oriented fixed income portfolios to meet the evolving financial, regulatory and stakeholder needs of our insurance and pension fund clients.
Mitigate climate risk
Regulatory changes, a growing consumer preference for cleaner companies and the physical risks of climate change could damage companies’ earnings power resulting in rising default risk.
Our expertise
Credibility
We are a world leader in fixed income investing. Our global team of analysts and portfolio managers across the fixed income spectrum provide ‘on the ground’ insights that help build portfolios that aim to achieve investors’ financial and non-financial objectives.
Experience
We started our first responsible investing mandate twenty years ago and have been at the forefront of sustainable investing ever since. We have been members of the Net Zero Asset Owner Alliance since 2019 and were a founding member of the Net Zero Asset Management Initiative.
Resources
We benefit from a global network of analysts and researchers, including 25 active fixed income portfolio managers. For sustainability, we have access to the research of over 30 dedicated global responsible investing professionals.
Under management in fixed income carbon transition strategies as at 31 December 2025
Active fixed income portfolio managers
Our fixed income carbon transition strategies
Our carbon transition solutions offer exposure to a variety of fixed income strategies, all backed up by our rigorous Net Zero alignment approach.
Carbon transition sterling buy and maintain
An all-duration sterling denominated strategy aligned with delivering against long-term goals.
Learn more Explore fundCarbon transition global short duration
Short duration strategies could provide a higher return than cash with only a small increase in risk.
Learn more Explore fundCarbon transition global core credit
How we invest in carbon transition
Our carbon transition approach is driven by five core beliefs
Financial objectives are important
Any financial cost to becoming more sustainable should either be insignificant or compensated by better risk-adjusted returns. Traditional risk metrics, such as volatility, VAR, and tracking error are still important alongside sustainability considerations.
Invest in the transition
It is vital to invest in sectors that are the most important for the necessary environmental and social transitions. Failing to do so limits access to relative value opportunities, reduces diversification and can prevent us from financing transitioning companies.
Alignment is a process
No portfolio can be fully aligned to all sustainable objectives in one day. We favour the gradual alignment of portfolios over time through turnover, natural cashflows (bonds maturing or client flows) and engagement.
Engage at all levels
The goal of engagement is to help issuers become more resilient to the impacts of environmental and social changes. We also engage with industry bodies, data providers and our own clients to help create a broader and more attractive investment universe.
Transparency builds credibility
Clear and detailed reporting is essential for a sustainable fixed income strategy. No single measure captures ‘sustainability’ and so we have developed a dashboard of different data to keep clients informed.
Important information
Marketing communication. For professional investors only.
Past performance or achievement is not indicative of current or future performance. Performance is calculated net of fees unless otherwise stated.
Any views expressed here are those of the author as of the date of publication, based on available information, and subject to change without notice. This material does not constitute investment advice.
Investments are subject to market fluctuations and the risks inherent in investments in securities. The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial investment. There is no guarantee that the performance objective will be achieved.
Environmental, social and governance (ESG) investment risk: The lack of common or harmonised definitions and labels integrating ESG and sustainability criteria at EU level may result in different approaches by managers when setting ESG objectives. This also means that it may be difficult to compare strategies integrating ESG and sustainability criteria to the extent that the selection and weightings applied to select investments may be based on metrics that may share the same name but have different underlying meanings. In evaluating a security based on the ESG and sustainability criteria, the Investment Manager may also use data sources provided by external ESG research providers. Given the evolving nature of ESG, these data sources may for the time being be incomplete, inaccurate or unavailable. Applying responsible business conduct standards in the investment process may lead to the exclusion of securities of certain issuers. Consequently, (the Sub-Fund’s) performance may at times be better or worse than the performance of relatable funds that do not apply such standards.
Fixed income sub-funds may be exposed to other risks defined below:
CAPITAL LOSS RISK: The value of the investments in Financial Instrument(s) and the returns generated by the described funds may go down as well as up. Investors may not get back the amount they originally invested.
INTEREST RATE RISK: The value of an investment may be affected by interest rate fluctuations. Interest rates may be influenced by several elements or events, such as monetary policy, the discount rate, inflation, etc.
CREDIT RISK: This is the risk that may derive from the rating downgrade of a bond issuer to which the sub-funds are exposed, which may therefore cause the value of the investments to go down. Sub-funds investing in high-yield bonds present a higher than average risk due to the greater fluctuation of their currency or the quality of the issuer.
COUNTERPARTY RISK: This risk relates to the quality or the default of the counterparty with which the Management Company negotiates, in particular involving payment for/delivery of financial instruments and the signing of agreements involving forward financial instruments. This risk is associated with the ability of the counterparty to fulfil its commitments (for example: payment, delivery and reimbursement). This risk also relates to efficient portfolio management techniques and instruments. If counterparty does not live up to its contractual obligations, it may affect investor returns.
MMFs ARE NOT GUARANTEED INVESTMENTS. An investment in MMFs is different from an investment in deposits, there is a risk that the principal invested in an MMF is capable of fluctuation. The MMF does not rely on external support for guaranteeing the liquidity of the MMF or stabilising the NAV per unit or share. The risk of loss of the principal is to be borne by the investor.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) INVESTMENT RISK: The lack of common or harmonized definitions and labels integrating ESG and sustainability criteria at EU level may result in different approaches by managers when setting ESG objectives. This also means that it may be difficult to compare strategies integrating ESG and sustainability criteria to the extent that the selection and weightings applied to select investments may be based on metrics that may share the same name but have different underlying meanings. In evaluating a security based on the ESG and sustainability criteria, the Investment Manager may also use data sources provided by external ESG research providers. Given the evolving nature of ESG, these data sources may for the time being be incomplete, inaccurate or unavailable. Applying responsible business conduct standards in the investment process may lead to the exclusion of securities of certain issuers. Consequently, the Sub-Fund’s performance may at times be better or worse than the performance of relatable funds that do not apply such standards.
This is not an exhaustive list of risks. For a full description of risks associated with each fund, please consult a client relationship manager or the global BNP Paribas Asset Management website: staging.bnpparibas-am.co.uk.