Each fixed income asset class has unique and varying degrees of ESG risk and opportunity. Issuers with credit risk most exposed to ESG-related risks, but impact-related opportunities are available across all fixed income asset classes.
For corporate (financial/non-financial) and select securitized bonds, ESG is integrated to enhance our credit analysis and facilitate:
- Avoidance of ESG laggards. ESG analysis helps avoid companies with unacceptable ESG risks and/or operating in industries that are at greater risk in the transition to a more sustainable economy, which we view as unacceptable credit risk.
- Enhanced Risk Management. ESG analysis provides additional insights into a company’s ability to manage operational and reputational risks and minimize exposure to disrupted industries. Analysis is key to managing credit risk and is the primary input into portfolio construction.
- Identifying well positioned companies. ESG analysis helps identify companies positioned to benefit from the transition to a more sustainable economy.
For SSA, with few exceptions, IAM LLC considers U.S. government-related entities to be central in providing liquidity, stability and affordability in several key markets of the U.S. economy.
For these reasons, U.S. treasury securities, certain U.S. agency bonds and mortgage-backed securities are generally available for investment.