Bond investors have lagged their equity counterparts in integrating ESG considerations into portfolios. But with ESG occupying a bigger role in credit ratings, and investors showing more willingness to engage with issuers, the fixed income sector may soon catch up.
The movement towards investing in line with environmental, social and governance (ESG) considerations appeared to have bypassed fixed income.
While equity investors have benefited from a wide body of research and performance benchmarks aligned to ESG factors, it has been a slower burn for bond investors. There is evidence to suggest the tide is now turning.