We observe the following factors when assessing government bonds from a sustainability perspective: political practices, government strength, social development, economic and financial stability, ability to withstand external shocks, and willingness to reform. An absolute lower score in any single factor does not always translate into excluding an investment. Instead, we focus on longer-term development and trends, whether they are positive or negative. Through instrument selection we can decide whether we are willing to finance a specific government or not. 

Within Emerging market sovereign debt, our strategies have a macroeconomic and fundamentally driven approach with ESG integrated process. Long-term investment horizon is based on country selection with combined qualitative and quantitative decision-making process. With our in-house quantitative model (consisting of around 30 indicators), we monitor the level and the development of economic, political and social factors (environment and climate change risk are included in social component). In addition, we analyze countries based on their performance in UN’s sustainable development goals (SDG) and other broad ESG data sets. A weak development in ESG factors can lead to a situation where country is excluded from our investment portfolios or we are not willing to finance the government.

For corporate bonds governance related topics have traditionally been an important part of credit risk analysis but issues relating to the environment and society are nonetheless gaining in importance. We believe that by assessing ESG factors we improve transparency and are able to identify new investment opportunities. Within corporate credit, ESG considerations are integrated in daily research and portfolio management activities. We assess different indicators depending on companies' business models. These are considered relative to relevant peer group and company history. We also consider ESG-related risks to business models and the ability of companies to respond to these risks by adapting their business models. In particular we focus on minimizing climate change related risks. Finally, we look into companies' positive impact on the environment and society. The proprietary ESG analysis includes both quantitative and qualitative components.

Within Emerging market sovereign debt, E, S and G factors are represented in our country selection model with wide set of indicators. They are a fundamental part of our country analysis and seen equally important as traditional economic factors. With our in-house quantitative model (consisting of around 30 indicators), we monitor the level and the development of economic, political and social factors (environment and climate change risk are included in social component). In addition, we analyze countries based on their performance in UN’s sustainable development goals (SDG) and other broad ESG data sets. A weak development in ESG factors can lead to a situation where country is excluded from our investment portfolios or we are not willing to finance the government.

We assess companies both qualitatively and using a proprietary ESG tool constructed in-house. The tool looks at a large dataset depending on sector/industry in question. The tool comprises indicators for E, S, G, so that there are in total 85 different indicators. The data source for the tool is Bloomberg. The credit team members then conduct qualitative analysis in order to broaden and widen a company's ESG profile when deemed necessary.