Our overall approach to ESG incorporation in fixed income focuses on the integration of quantitative and qualitative ESG data across active investment strategies as a means of improving risk adjusted returns while promoting efforts to address environmental and social issues. For example, certain corporate credit strategies integrate quantitative and qualitative ESG data in the evaluation and selection of individual corporate credits in addition to top-down ESG risk identification and monitoring at the portfolio level. Certain Emerging Market fixed income strategies combine approaches by screening for certain governance qualities or jurisdictional risk factors like money laundering, as well as using in-house developed quantitative sovereign ESG data when making investment decisions.
We do not apply divestment exclusions, or negative screening based on normative factors at the firm-wide level, on the belief that engagement is more effective. However certain investment strategies and funds can and do apply their own exclusions, in line with investment guidelines and social norms where they operate.