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China fixed income: The case for sustainable investing

Discover opportunities for achieving energy transition objectives

Why does China matter from an ESG perspective

We believe that the time has come where ESG investing in China is increasingly a why not moment. As China is one of the largest carbon emitters globally, it has adopted one of the most ambitious climate change plan. As a result, there is potential for fixed income investors to explore thematic opportunities that can offer attractive yield.

One of the most ambitious climate change targets globally

China is in the midst of a rapid scale up of renewable energy capacity that is unparalleled globally. 

Convergence of China's ESG taxonomy with international standards

China's ESG standards are quickly aligning with global norms as evidenced by the recent publication of the EU China Common Ground Taxonomy (CGT).

China will be leading the race for carbon emissions reductions in Asia

The International Energy Agency (IEA) has forecast that China’s annual energy spending will reach US$640 billion by 2030 to meet its peak carbon target.

Source: IEA, September 2021.

China has one of the most ambitious climate change targets globally

China is building renewables at a faster rate than Europe

Source: Irena, Invesco

Internationalisation of Chinese Bonds

EU-China common ground taxonomy is a big move towards international alignment
China green bond issuance is on a rebound

Source: Bloomberg, as of March 2022.

USD green bond universe represents just 15% of China's GDP with a substantial room for growth

Source: Bloomberg, as of March 2022.

China is expected to lead the race for carbon emissions reduction in Asia

Percentage change in Asia Pacific carbon emissions from 2020

Source: Wood Makenzie, data as of 10 August 2021.

Investing in Chinese fixed income

Explore the opportunities to enjoy the China growth story in a sustainable way through investing in China fixed income, which has the potential to provide attractive risk-adjusted returns and diversification benefits.

Comprehensive ESG policy

Comprehensive ESG policy to address key areas of concern for sustainability-focused investors.

In-house ESG research

In-house ESG research ensures independent and active approach to issuer selection.

Active ownership

Active ownership to drive the change towards a sustainable world.

Large and growing universe with attractive yield

China offers attractive yields and trades at a discount to Asian names
China is a yield driver in the investment universe

Source: Aladdin, Invesco, Bloomberg, as of 31 December 2021.

Chinese credits trade at an attractive discount

Source: Aladdin, Invesco, Bloomberg, as of 31 December 2021.

Investment Insights

A blog series on China’s sustainable investing landscape for fixed income.

Blog 4: Focusing on the sustainable bond market

This is the last of a four-part blog series that seeks to demystify China’s sustainable investing landscape for fixed income. In our first blog we outlined the importance of China’s role in sustainable investing. The second article in the series looked at how China’s taxonomy is aligning with international standards. We articulated the thematic investment opportunities that may exist in China from a fixed Income perspective in the third blog. This fourth piece seeks to familiarize investors with China’s sustainable bond market.

Invesco's sustainable fixed income platform

We are committed to becoming a leader for ESG in fixed income

Platform

- $24bn AUM in ESG strategies1

- Independent and proprietary ESG research since 2018

- Specialist asset class teams

- Scalable platform for clients solutions

Solutions

- ESG Integrated, responsible and sustainalbe strategies

- Carbon optimization

- Net zero aligned portfolios

- Multi-sector

Clients

- ESG aware mandates since 1989

- Insurance 

- Pension funds

- Foundations

- Private investors

Source: Invesco. 1 as of 31 December 2021.

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