Major clients of Aon invest £100 million in two separate climate transition funds
In a significant move towards sustainable investment, global professional services company Aon's clients have invested £100m in the launch of two new Allspring-managed climate transition fixed income funds.
The Climate Transition Buy and Maintain Plus Funds, launched by Allspring, are fixed income strategies focused on supporting climate transition goals while providing stable returns. These funds employ a “buy and maintain” investment approach, meaning they primarily purchase bonds and hold them to maturity to generate consistent income and reduce transaction costs.
The funds specifically target issuers and assets aligned with climate transition objectives, integrating environmental criteria into the fixed income investment process. Aon, which provides advisory and fiduciary services to public and corporate defined benefit plans, as well as charities and endowments, has been instrumental in facilitating these investments, although it did not disclose the names of the clients in question.
These funds are the latest addition to Allspring's climate transition offerings, following the launch of the Climate Transition Global Buy and Maintain Fund in August 2023. The funds are registered for distribution in the UK and Luxembourg for institutional investors.
Key characteristics of the Climate Transition Buy and Maintain Plus Funds include:
- A focus on climate-aligned fixed income securities, supporting the transition to a low-carbon economy.
- The utilization of a buy and maintain strategy to enhance income stability and reduce portfolio turnover.
- Access is typically through institutional channels, often linked with Aon’s client base as part of their sustainable investment solutions.
- The funds may incorporate exclusions or positive screening based on environmental impact or carbon footprint metrics.
- The strategy aims for risk-adjusted returns consistent with fixed income benchmarks while contributing to environmental goals.
Simon Rhodes, CFA, associate partner, head of liquid credit content at Aon, expects the funds to provide a valuable additional return contribution to clients' portfolios. Alex Temple, senior portfolio manager at Allspring, considers the funds as the next logical step in the evolution of their climate transition product suite.
These funds are offered in multiple locations, including regions where Aon’s clients are located. Aon’s clients play a significant role in funding these funds, as they have been among the earliest institutional investors contributing capital to support this climate-focused strategy.
Fixed income accounts for three quarters of Allspring's £400bn assets. The Climate Transition Buy and Maintain Plus 2025-2029 Fund and the Climate Transition Buy and Maintain Plus 2030-2034 Fund were launched on 22 January.
The funds apply a "climate transition approach" to help clients achieve their net-zero ambition while delivering on their financial objectives. This aligns with growing demand for sustainable investment solutions in the institutional fixed income space.
- The Climate Transition Buy and Maintain Plus Funds, launched by Allspring, are a part of environmental-science, as they focus on climate transition goals while providing stable returns.
- Aon, a company known for its advisory and fiduciary services, is involved in the finance and business sector by facilitating significant sustainable investments in the climate-change sector.
- The Climate Transition Buy and Maintain Plus Funds, due to their climate-aligned fixed income securities and focus on a low-carbon economy, appeal to the industrial sector that is seeking to reduce its carbon footprint and support environmental goals.
