From an investment perspective, SKY Harbor’s process is designed to identify, value and manage specific High Yield market risks, which inherently includes ESG factors. As is the case for our analysis of all risk factors, the goal of ESG analysis is best characterized by systematic identification and monitoring to manage how these risks affect issuers and industries over time. Specifically, we look for sustainability and responsible behavior in the companies we invest in, and their ability and willingness to service debt obligations. Among other risks, ESG factors are incorporated in our fundamental credit analysis to assess, for example, environmental and product liabilities, employee training and retention, and corporate governance and legal risks. We recognize the potential for a high correlation between companies that manage ESG factors well and superior investment returns: companies that embark on sustainable and responsible business practices that promote diversity and inclusion, best practices in governance, responsible use of natural resources and moderate carbon emissions are companies best positioned for the future.
SKY Harbor utilizes a risk-based methodology for assessing and evaluating ESG factors pertinent to the issuers in which it invests. This approach is applied across all strategies. Certain individual portfolios may be further defined by client-directed ESG criteria or regulatory requirements as in the case of UCITS funds for which SKY Harbor is the investment manager.