Mark shares his views on how ESG fits into our investment process, areas for improvement and future ESG plans at BlueBay.
As CIO, what is your vision in terms of where you are looking to take BlueBay’s investment processes and how does ESG fit within this?
My vision for BlueBay is ensuring our investment professionals are part of one investment team, operating within a single investment process. This process is comprised of three distinct elements: 1) alpha sources; 2) product design; and 3) portfolio construction.
I see ESG analysis as an important part of the proprietary research that flows into our alpha sources. It is also a key input into product design and portfolio construction for both our mainstream strategies and our dedicated ESG products.
We anticipate expanding our product range as we continue to ensure we understand and meet the evolving needs of our clients by providing a compelling ESG product offering, including exploring the potential to add strategies with a more explicit focus on impact and sustainable investing.
What do you think BlueBay does well regarding ESG and where do you see room for improvement?
For me, two areas stand out as ones where BlueBay has done well. Over the last couple of years, we have become more systematic in our ESG coverage with respect to our active positions across the strategies we manage – completing issuer ESG analysis has been critical in providing a strong foundation with regards to ESG integration.
The second area is incorporating this ESG analysis within our in-house proprietary platforms. This was critical in ensuring we can input this research into our alpha source determinations and investment decisions.
Going forward, I believe it is important we continue to build on this progress by further developing our ESG reporting capabilities. Our clients are telling us they want us to be able to better evidence how we are exercising stewardship and engagement and having a positive impact on their behalf.
What more can we expect to see from BlueBay regarding ESG?
Much of our focus for the months ahead will remain on our ongoing ESG analysis efforts and maintaining our coverage of held investments. It is essential that ESG continues to be part of standard business practice across our investment strategies. ESG should not be seen as a separate investment discipline – it should rightly be embedded into every investment decision.
In terms of our ESG infrastructure, we will continue to enhance our ESG client-reporting capabilities and also work to develop a centralised ESG engagement platform to further demonstrate our efforts in this regard.
As client needs evolve with regards to ESG and demand increases for dedicated strategies, I am keen for us to strengthen our offerings here to meet that.
On the topic of evolving ESG investment approaches, I am personally keen to gauge interest levels in a more sophisticated take that goes beyond exclusions lists, where active investors like BlueBay take short positions in poor ESG performers – so move beyond only holding long positions in those performing well. The option to go short also gives more teeth to ESG engagement discussion.