Describe your reasons for choosing a particular ESG incorporation strategy and how combinations of strategies are used.
A strong ESG approach improves Risk/Return and is the right thing to do.
Quantitative & Qualitative ESG assessment.
At the fixed income level our process is as follows:
- Firstly, we identify ESG issues through extensive sovereign, company and industry due diligence including a proactive program of engaging all stakeholders and third party consultants/brokers to undertake bespoke research. ESG considerations are analysed across seven main factors.
- ESG issues which are identified are included in our one-page investment thesis produced for each issuer, and factored into our credit assessments.
- If we assess the ESG issues identified to be sufficiently material and a threshold issue, we will not invest in that company. An ESG rating below BB is considered a 'threshold', overriding all favourable credit or relative value views.
- ESG issues identified and found not to be threshold issues are incorporated into our valuation work. This will typically result in a lower than otherwise credit rating, which will typically require greater compensation/return to justify the investment. Changes in our ESG ratings (positive or negative) can also be a driver of investment decisions.
Additional information [Optional].