By Roger Aitken — Following a number of positive impact bond purchases, Praxis Mutual Funds, a leading faith-based and socially responsible family of mutual funds advised by Everence Capital Management that integrates organizations and peoples’ ‘finances with values’, is continuing in its commitment to investing in climate and community.
The positive impact bonds added to the Praxis Impact Bond Fund portfolio (formerly the ‘Praxis Intermediate Income Bond’) in the second quarter (Q2) of 2016, seek current income and, to a lesser extent capital appreciation, whilst ‘incorporating stewardship investing criteria’.
Additionally, the investments will support projects to develop sustainable and renewable energy infrastructure, as well as fund innovative, sustainable corporate initiatives.
Chad Horning, President of Praxis Mutual Funds and Chief Investment Officer of Everence, which was founded in 1945 by the Mennonite Church in the U.S., commenting said: “The latest positive impact bonds added to the portfolio show the unique snapshot of green projects developed by governments, corporations and more. These bonds are an investment in a clean and sustainable future for our world - and a welcome addition to our impact bond holdings.”
Among examples of such impact bonds purchased by the fund, which is marketed and sold through Everence Capital’s network of 400 staff and advisors, are fixed-income securities from India, Costa Rica and the European Investment Bank (EIB) and Starbucks.
As of June 30, 2016, the fund had added Axis Bank’s Green Bond to the portfolio through an investment in Axis Bank 2.875% 06/01/21 bond, with that holding representing of 0.11% of the fund.
The Indian bank is the first company in India to issue a certified green bond, which will finance climate solutions around the world.
Additionally, EIB Green Bonds were added to the portfolio with a range of maturities between 2014 and 2026 and coupons from 2.125% to 2.50% - representing 0.23% and 0.24% of Praxis’ fund. EIB, a leading issuer of green bonds, is known for its detailed financial and impact reporting and the bank funds projects around the globe that work toward energy efficiency and expand renewable energy.
On top of this several other bonds were added. Names include Banco Nacional Costa Rica Green Bond, the Central American nation’s first green bond that will finance wind, solar, small hydro and wastewater projects across the country. It is based on Costa Rican environmental protection standards.
Starbucks Corporate Sustainability Bond, the first of its kind in the U.S., has also been included. This bond’s proceeds will help Starbucks enhance its sustainability programs in its coffee supply chain management, including fair pay for workers and protection for the environment. With a 2.45% coupon and a 2026 maturity, it represents 0.23% of the portfolio.
Others include Spruce ABS Trust Green Bonds, where funds from the bond financing loans for residential solar and home efficiency improvements, helping bring the benefits of low-carbon energy to the average consumer; the State of Massachusetts; Westar Energy in Kansas; and, Toyota Motor Corp.
Benjamin Bailey, Senior Fixed-Income Investment at Praxis Mutual Funds (praxismutualfunds.com), noted that the firm “benefits from ever-improving positive impact bond options, as that market continues to expand”.
He added: “When selecting positive impact bonds for the portfolio, we look for those with clear plans to make a significant difference and also add to a well-diversified portfolio.”
Positive impact investments now make up almost 23% of the Praxis Impact Bond Fund and the fund’s high social impact investments also include a 1% commitment to community development investments, benefitting underprivileged communities nationally and around the world.