Pendal’s philosophy for all our fixed income (FI) funds is that where ESG factors are considered material to risk and return outcomes they are incorporated into the investment process. Time horizons and materiality of ESG factors varies across asset classes as well as by strategy within FI. For example, the value added from incorporating ESG factors into fixed interest analysis relates more to risk mitigation than other asset classes. In addition, we have also found the value added from an ESG incorporation strategy is more material to credit than to developed market SSA.
We have 5 types of ESG strategies:
- ESG incorporation
- Exclusion screens
- Sustainable (Best of Sector)
- ESG Thematic - Green, Social, Sustainability Bonds
- Active ownership/Engagement: directly & indirectly (via our Equity teams, Regnan)
The choice and combination of ESG strategies above is tailored to be aligned with our views of how we can best manage the values and value (risk/return) objectives for the portfolio / clients.
Our process utilises internal and external ESG resources e.g. our FI teams discuss and access ESG research and analysis from our equity teams, this is particularly relevant for our credit team. External sources include ESG data from Regnan, MSCI and Rating Agencies.