ESG forms a key part of our risk assessment in our credit research reports that evaluate the credit worthiness of issuers. Even when ESG factors are not sufficient to warrant an exclusion of a corporate issuers we assess as part of our research process the potential for ESG factors to produce negative credit outcomes. In credit research we are much more focused on potential negative outcomes as part of our process irrespective of if potential outcomes are ESG related or not due to the asymmetric nature of the asset class.
BCI has recently made an allocation to the private debt market. When opportunities arise we perform an initial assessment of the creditworthiness of a borrower. If the opportunity passes this intital test, it is then subjected to more intensive due diligence, including ESG considerations, and ultimately presented to a formal credit committee that authorizes the investment. Each investment recommendation includes an ESG section. BCI has passed on certain investments due to ESG concerns.