ESG considerations are a standard part of our investment process. Portfolio managers and analysts continually evaluate the management of the issuers in our portfolios and the issuers we are considering for investment. As we evaluate the management, we consider whether they act in a sustainable way with regard to the environment and with regard to their employees and other constituents. We also weigh their corporate governance with regard to how they treat shareholders and bondholders. We believe that consideration of sustainability helps us invest in stronger companies and improving credits, and avoid defaults.
NCRAM research analysts include a summary of an issuer’s strengths and risks with regard to ESG factors in new-issue or other introductory credit reports. To augment our internal research, NCRAM has engaged Sustainalytics to provide external research on ESG factors. Analysts and PMs consider those factors in their credit analysis and assess whether the strengths and risks are priced into market yields and spreads. Existing positions are continually monitored by the research analyst and also are formally reviewed during periodic portfolio reviews among the portfolio manager, CIO and credit analyst. Should we assess that the company’s activities may not reflect our ESG principles, the holding will be re-assessed. Our CIO supervises our investment process, including the consideration of ESG factors.