China’s green bond market hit record levels of issuance, as the second-largest economy in the world races toward a net-zero emissions future. Green bonds, which finance climate-friendly projects, are part of China’s efforts to mitigate the heavy pollution resulting from its rapid industrial expansion.
In the upcoming webcast, Green Bonds: Inside China’s Playbook For Battling Climate Change, Justin Lowry, president and CIO of Global Beta Advisors, will discuss how investors can capitalize on the growing Chinese green bond market.
To help investors access China’s green bond market, Global Beta Advisors is working on the actively managed Global Beta China Green Bond ETF (GRBD), according to a Securities and Exchange Commission exemptive relief filing.
The active China green bond ETF strategy will track debt securities issued by Chinese corporations that finance environmentally beneficial projects, such as building eco-efficient products or products to prevent and/or control pollution output; investing in wind, solar, or hydrogen-powered energy; or any project targeted to addressing environmentally driven climate change issues. The fund may also hold U.S. dollar-denominated Chinese debt instruments. Global Beta Advisors makes it clear that the ETF will not invest in state-owned enterprises.
In a bid to achieve its green objective, Global Beta Advisors LLC will screen a broad universe of Chinese corporate debt securities and select bonds that finance environmentally beneficial projects. The bond selection is further refined based on FactSet’s TruValue Labs’ environmental, social, and governance, or ESG, scoring methodology.
TruValue mines semantic big data, capturing the views of analysts, advocacy groups, and government regulators, all as published by independent media to produce scores and trends that measure a company’s sustainability performance. Issuers that rank below their industry’s average are removed from consideration.
The managers will also rank issuers on long-term industry-adjusted scores, the recent trajectory of their ESG practices, their credit quality, and their net debt to equity ratio. Bonds with certification from the Climate Bonds Initiative will have greater consideration.
The debt securities will also be evaluated based on credit quality, coupon rate, current yield-to-maturity, convexity, duration, and option-adjusted spreads.
Financial advisors who are interested in learning more about China’s green bonds can register for the Wednesday, March 2 webcast here.