ESG is integrated into fixed income strategies to enhance our credit analysis:
•Avoidance of ESG laggards. ESG-analysis helps avoid companies with unacceptable ESG risks and/or operating in industries at risk in the transition to a more sustainable economy; unacceptable credit risk.
•Enhanced Risk Management. ESG-analysis provides additional insights into companies’ ability to manage operational and reputational risks and minimize exposure to disrupted industries. Analysis is key to managing credit risk, 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.
Further, our fixed income strategies seek to avoid investment in companies with:
- involvement in the manufacture or sale of weapons (including firearms);
- manufacturing of tobacco products;
- primary business in coal mining and production;
- sole or majority of operations in oil sands;
- reliance on coal, in the case of utilities, above national average, unless company has demonstrated significant commitment to renewables and is reducing dependence on coal.
We consider the revenue and activity to determine company involvement in weapons manufacturing. We exclude companies involved in the manufacture of cluster munitions, landmines and nuclear weapons - regardless of revenues - due to their indiscriminate nature.