At AIM our vision is to mobilise capital to address the major challenges the world faces. By establishing and growing an organisation that is solely concentrated on broadening and deepening the impact bond market, we believe impact investing can become a significant focus of the $110tn global bond market.

This week the UK government announced that it will be launching green gilts, the first of which will be issued in 2021. We are pleased to see the UK government taking this step.

At AIM we encourage sovereign issuance and recently signed an investor letter calling the UK to issue a Green Gilt. We have previously engaged with the UK Debt Management Office on the topic of green bonds and have shared our Impact Report with the department.

We believe sovereign issuance is beneficial for the impact bond market. Not only does it further increase market liquidity, but issuance from governments also encourages new issuers to the marketplace. In 2020 we have seen increased sovereign issuance with countries such as Mexico, Sweden and Germany entering the market. In issuing its debut green bond, Germany introduced the concept of a “green twin”, where a green bond is issued with the same maturity and coupon as a conventional bonds. Additional sovereign issuance is also expected this year from Italy and Spain.

As with any issue which enters our investable universe, sovereign issuances are subject to the full SPECTRUM verification process. You can read more about this process on our website, here.

The UK government has also announced that there will be a new green UK taxonomy, based on the EU taxonomy, and that it will be introducing mandatory climate disclosures for large companies and financial services by 2025, consistent with the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD). At AIM we have begun to integrate the TCFD recommendations into our annual Impact Reports. This year we conducted a physical climate risk assessment of our portfolios and reported on key carbon metrics such as the Weighted Average Carbon Intensity (WACI). You can access examples of our Impact Reports on our website here. We aim to publish a comprehensive TCFD-aligned climate disclosure report in 2021.