- AIIB and Amundi Launch an Innovative Climate Framework
AIIB and Amundi Launch an Innovative Climate Framework
Tuesday 10 September 2019
A new fixed income portfolio to accelerate climate action in the Bank’s members and to address the underdevelopment of the climate bond market.
The Asian Infrastructure Investment Bank (AIIB) and Amundi have announced a USD500-million portfolio dedicated to Asia Climate Bonds, which aims to accelerate climate action in the Bank’s members and to address the underdevelopment of the climate bond market.
Through a managed fixed income portfolio of an initial USD500 million, the joint project expects to mobilize another USD500 million from climate change-focused institutional investors. A portion of the investment proceeds will be allocated to market education, engagement and issuer support.
Over the next few decades, climate change and climate policies will affect all economic actors. The physical impact of climate change will directly impact companies and States, climate mitigation policies will affect all economic actors and widespread support for the ecological and energy transition should see green eaders thrive.
Amundi and AIIB have developed a first-of-its kind Climate Change Investment framework, which takes into account these three variables to analyze issuers’ ability to cope with climate change.
Yves Perrier, Amundi’s CEO, comments: “Supporting Climate Champions and the Paris Agreement in Asia is in line with Amundi’s commitment to ESG investing and reflects our extensive commitment to the region. We are proud to launch this new initiative in the field of climate finance.”
Amundi wins the PRI Award, Real World Impact Initiative of the Year
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A Note on Portfolio Optimization with Quadratic Transaction Costs
In this short note, we consider mean-variance optimized portfolios with transaction costs. We show that introducing quadratic transaction costs makes the optimization problem more difficult than using linear transaction costs. The reason lies in the specification of the budget constraint, which is no longer linear. We provide numerical algorithms for solving this issue and illustrate how transaction costs may considerably impact the expected returns of optimized portfolios.