Relevant and material issues are taken into consideration and analyzed to what extent they may influence the value and return of the asset/investment. The FI managers have the same tools and information about possible sustainability issues as the equity managers. Each manager analyses the risk/return profile of the investment and sustainability is one among several risks to be assessed.
The incorporation strategies must be realistic and relevant for the mandate/strategy in question.
The relevant and material ESG issues with regard to the company, sector, geographical market, and the mandate/strategy the PM has must be set in a context and analyzed. The gathering of data and information will most likely come from different sources and the investment decision will depend on the reliability of the data, the PM's insight and knowledge and also degree of risk aversion and the perception of what is already priced in.
As many ESG factors not have a market price, the PM will have to evaluate the impact a factor might have and over what time horizon.
It is each active PM's responsibility to analyze the bonds in the specific portfolio with respect to sustainability risks/opportunities and be prepared to explain the positions. Again the relevance and materiality will differ for different mandates, different strategies and different investment horizons.
Bond portfolio managers also participate in the advisory group on Sustainability where ESG issues are presented and discussed in order to best address the issues.
The Fund's managers have an ongoing discussion about questions that are raised; e.g... governance issues, CO2 emissions, energy efficiency matters, HR etc.