investment viewpoints

What makes a SPECTRUM issuer?

What makes a SPECTRUM issuer?
Thomas Höhne-Sparborth, PhD - Head of Sustainability Research

Thomas Höhne-Sparborth, PhD

Head of Sustainability Research
Christopher Kaminker, PhD - Group Head of Sustainable Investment Research, Strategy & Stewardship

Christopher Kaminker, PhD

Group Head of Sustainable Investment Research, Strategy & Stewardship
Erika Karolina Wranegard - Portfolio Manager, Fixed Income

Erika Karolina Wranegard

Portfolio Manager, Fixed Income

The Global Climate Bond strategy generates positive environmental and social impact, without compromising financial returns. Suitable issuers and bonds are identified via Affirmative Investment Management’s (AIM) propriety SPECTRUM Bond® analysis framework.

AIM’s three-stage investment process begins with verification. This involves the application of AIM’s proprietary SPECTRUM Bond® criteria to identify the impact investment universe, which includes issuer self–labelled, use–of–proceeds green, social and sustainability bonds, and unlabelled pure play bonds. This stage of the process includes sustainability and credit assessments, which extend to analysing both the issuer and bond issue. The rigorous sustainability and credit process fully integrates environmental, social and governance (ESG) assessment and ESG issues from the starting point in terms of identifying eligible investments.

The SPECTRUM Bond® criteria represents a robust, in-depth analysis that is applied to both issuers and bond issues. The process determines whether potential investments are aligned with AIM’s stated purpose to support the United Nations Sustainable Development Goals (SDGs) and the Paris Agreement on climate change, and whether positive environmental and/or social externalities are associated with the issuance. In order that AIM can assess whether funded activities meet the criteria, there also needs to be an ability to determine use of proceeds. Issuers must be deemed to have appropriate governance, policies and operational conduct, as well as a strong financial structure, in addition to clear and transparent reporting and disclosure. Issuers must also be found to have strong integrity and environmental and social standards, as well as a clear commitment to a sustainable business model. The framework also ensures transparent reporting on material and measurable environmental and social impact.   

SPECTRUM is predominantly a positive selection methodology, which is an assessment of environmental and/or social impact of the bond framework/bond issue alongside an assessment of the issuer. Positive selection allows the analyst to assess based on current performance and direction of travel, including the transition strategy, for example. A good example of a portfolio holding which has been added on the basis of positive selection is Ørsted1.

Ørsted is a Danish energy company that was once one of the most coal-intensive in Europe. Over time, it has transitioned to become a leading renewable energy company that is ranked one of the world’s most sustainable companies. Positive selection allows judgement to be made based on the direction an organisation is travelling in, instead of exclusively focusing on where they are. This process recognised that Ørsted was committed to a low-carbon transition, had a track record of positive progress that looked set to continue, had stated targets relating to decarbonising and therefore was a good candidate for inclusion In the SPECTRUM Bond® universe.

The strategy also incorporates a small number of SPECTRUM-aligned holdings, in addition to labelled and unlabelled bonds, which amounted to 7% of the portfolio in 2020. These holdings stem from issuers who receive at least 50% of revenues generated from sectors aligned with the AIM taxonomy and represent an important risk management tool as they provide enhanced liquidity.

The SPECTRUM Bond® criteria has been designed to go beyond industry standards of green bond identification and certification, in order to offer a more comprehensive overview of the market. Following the verification process, the investment team then constructs and maintains a diverse range of portfolios, including the Global Climate Bond strategy, from this list of eligible securities purely for risk-adjusted return.

AIM has designed the proprietary SPECTRUM Bond® analysis framework to independently verify impact bonds that mobilise mainstream capital to address the major challenges the world faces. This verification process is key to building and managing fixed income portfolios that generate positive impact, while achieving mainstream financial returns.











Positive Externalities

Ethics & Issuer Conduct



Responsible Issuer

Use of Proceeds

Material & Measurable

Aligned with our purpose to support the SDGs and Paris Agreement on climate change

Positive environmental and/or social externalities associated with the issuance

Issuers must have appropriate governance, policies and operational conduct

Issuers must have a strong financial structure

Issuers with clear and transparent reporting and disclosure

Issuers with strong integrity and environmental and social standards, as well as a clear commitment to a sustainable model

Ability to determine use of proceeds to assure funded activities meet our criteria

Issuers with reporting on material and measurable environmental and social impact



1 Any reference to a specific company or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or securities. It should not be assumed that the recommendations made in the future will be profitable or will equal the performance of the securities discussed in this document

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