In reklation to 19.4
We believe it is important for the analysts to spend time on the ground and observe country conditions first-hand to verify whether the statistics or the news is giving the full picture. This time spent on the ground can include meetings with government officials where ESG issues can be raised. However a great deal can also be gauged simply by observing the surrounding environment.
The team recognises the evolving nature of RI and stewardship for fixed income investments, and in particular for sovereign issuers. In order to develop our own understanding as well as to contribute to improvements in industry practices we have been involved in the United Nations Environmental Programme Finance Initiatives E-RISC project phase 2, which is developing methods for investors to incorporate environmental factors into the assessment of sovereign issuers.
Fixed Income and Credit Teams
Issues for engagement are identified following our thorough company research.
The team’s key engagement is with banks and counterparties to understand their ESG risks and their approach to managing those risks. For example, climate change and other environmental risks relating to the bank’s loan book and financing, and aspects of their lending policies.
A challenge for responsible credit investors has been effective ESG engagement with issuers. This is in part due to the contractual nature of bond investments and the fact that a majority of securities are purchased on secondary markets. We do actively incorporate questions into meetings with primary issuers. Our brokers are aware of our ESG focus and facilitate ESG discussions where possible. We continue to build on this program of engagement over time.