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Are government bonds compatible with an ESG approach? - M&G Investments

M&G believe governments frequently bring meaningful benefits to societies, which should be acknowledged alongside any activity in less desirable sectors.

Posted on Jun 19, 2019

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Some investors may prefer to exclude holdings of government bonds and derivatives in ESG-screened portfolios. However, in most cases governments seek to deliver positive impacts overall through their policies and spending. Government bonds can also play an important role in the multi-asset investment processes, as managers seek to deliver return objectives.

  • Any government’s revenue raising and spending is likely to cover a complex range of activities.
  • The benefits of government spending and policies should be viewed alongside investors’ concerns about participation in other activities.
  • Government bonds and derivatives can play important roles in applying asset allocation views, using easily traded, liquid securities.

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