Integrating the Sustainable Development Goals in Government Bond Investment Strategies
35 Pages Posted: 25 Feb 2023
Date Written: February 20, 2023
This paper investigates how investors can integrate the Sustainable Development Goals (SDG) into government bond portfolios. First, we develop a framework that assesses if countries: (i) have good policies for the SDGs; (ii) need better access to capital in order to finance sustainable development; and (iii) respect key sustainability principles. We argue that countries meeting these three criteria deserve priority for inclusion in SDG-aligned government bond portfolios. Second, we apply this framework to 170 countries, allowing us to create SDG-scores for each country. Third, to show how these scores can be used in practice, we create a hypothetical sovereign bond portfolio that aligns with the SDGs. We raise implications for sustainable investing and the financing of the SDGs.
Keywords: Sustainable investing, Sovereign debt, Bonds, Sustainable Development Goals (SDGs), ESG
JEL Classification: G11, G12, G14
Suggested Citation: Suggested Citation