The recent credit market selloff has been particularly hard on sustainable debt, challenging the popular premise that investors can do well and do good at the same time.
A Bloomberg index of environmental, social and governance debt has lagged a global bond benchmark by about 64 basis points over the past year. In Europe, which dominates the $4 trillion market, green corporate bonds have slumped 6.7% so far this year, more than the 6.1% loss for normal debt. China high-grade corporate green bonds underperformed non-green peers in the first quarter while in the U.S., green bonds modestly outperformed like-for-like counterparts, according to Morgan Stanley.
