Most people think a green or sustainable label on a bond means it is good for the planet. Often, it does not. A label only tells you what the issuer says it will do with the money. It does not prove that real change happens on the ground.

That gap is the heart of this episode of SRI360. I'm joined by Elizabeth Alm, Senior Investment Analyst and Portfolio Manager at Saturna Capital, the oldest and largest Sharia asset manager in the United States. Elizabeth helps run the firm's global sustainable bond fund and its Islamic income fund. Her core belief is simple: that bonds play a central role in financing the transition to a cleaner economy.

Elizabeth did not take the usual path into finance. She studied economics and anthropology at NYU and once dreamed of becoming an archaeologist. It took her 50 interviews to land her first job. She opened Excel for the first time on her first day of work, and her first week on a trading desk was the week Bear Stearns collapsed in 2008. Eleven years at Wells Fargo followed, working in municipal bonds as climate risk slowly began to show up in credit.

Today she puts less weight on third-party ESG scores and looks for what she calls “climate alpha” — value the market has not priced in yet. In this conversation we cover how sukuk (Islamic bonds) work, why investors who are not Muslim are buying them, and what she learned on a month-long research trip across the Middle East that ended just five days before the Israel-US-Iran war broke out.

In this episode we discuss:

• Why a bond's label tells you the plan, not the real-world impact
• How sukuk (Islamic bonds) work, and why they must be backed by real assets
• Why investors who are not Muslim are buying sukuk
• A bond she loves: Tabreed, the UAE cooling company that cuts emissions
• Why sovereigns with high physical climate risk are 18% more likely to default
• How satellite monitoring helped identify and mitigate 30,000 child-labor cases in a cocoa supply chain
• The wave of AI data-center debt, and why she is cautious about it

Featured guest:

• Elizabeth Alm,Senior Investment Analyst and Portfolio Manager at Saturna Capital

Listen Next:

• Patrick Drum — Saturna Capital (Episode 16): Saturna's Patrick Drum on Islamic Finance, Faith-Based Investing, Sustainable Outcomes, ESG and More

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