Sustainable investing capabilities fi insights

Key arguments

• Carbon intensity figures reported for sovereign bond portfolios are not directly comparable with those reported for corporate bond and equity portfolios.
• Sovereign emissions metrics rest on national accounting frameworks, which can create double-counting issues and differ conceptually from corporate carbon-intensity measures.
• The number of sovereign issuers available for investment is typically more limited than the number of corporate issuers.
• The extent to which sustainability preferences can be applied depends on eligible universe breadth, data coverage, selected objectives and targets, and the need to maintain intended risk-return characteristics relative to the chosen index.

Corresponding source evidence

1. Sustainable investing capabilities in fixed income 4 Investors might choose a custom portfolio solution for the flexibility to change objectives over time and incorporate multiple data sources directly into the investment process, while maintaining a disciplined approach to managing risk and tracking error relative to the reference benchmark.
2. Third-Party ESG/Sustainable Investing Index Investment Strategies, as defined below Note: ESG/sustainability data coverage limitations or other factors may result in positive or negative screening being applied to less than 100% of a Sustainable Investing Account.
3. Bonds generally present less short-term risk and volatility than stocks, but contain interest rate risk (as interest rates raise, bond prices usually fall); issuer default risk; issuer credit risk; liquidity risk; and inflation risk. · short-term