Integrating ESG factors into our investment process isn’t just about doing the right thing for people and the planet, it’s also about delivering returns for our clients.
Things are shifting in the fixed income universe. When it comes to ESG, while sovereign governance and corporate management practices have long been recognised as important drivers of performance, environmental and social issues have played a more marginal role.
But this is changing…
Unusual weather patterns are leading to droughts which are directly impacting sovereign balance sheets. Long-standing income inequality issues are triggering social unrest, which impacts market price action.
As ESG factors play an increasingly prominent role in issuer credit ratings, markets are becoming acutely aware of risks associated with stranded assets, while projects financing green or sustainable development goals-aligned investments are attracting lower yields and cheaper funding.
ESG ‘megatrends’ such as climate change are having far-reaching effects on a global scale – shaping the investment environment, driving fast change to the regulatory landscape and increasing pressure on transparency and data disclosure.
Not only do these rapid changes present long-term challenges for societies and economies, they also offer significant potential opportunities for active investors to play a role in shaping outcomes while delivering investment returns.
We’re evolving our investment processes to reflect today’s changing world – we see these changes as opportunities for potential outperformance.
To learn how we combine ESG factors with active management in our emerging market strategies for enhanced performance potential, download our latest white paper, ‘Broadening our horizons’.
In this paper we share:
- How we are tackling the challenges of ESG integration within fixed income
- Examples of tangible results of our value-add ESG engagement initiatives & research
- Our perspective of seeing ESG through the lens of alpha opportunity, rather than as just a risk-management tool
- How we are embedding ESG into our investment mindset and team culture