Pendal’s philosophy for all our fixed income (FI) Funds is that where ESG factors are considered material to risk and return outcomes they are incorporated into the investment process. Time horizons and materiality of ESG factors varies across asset classes as well as by strategy within FI. For example, the value added from incorporating ESG factors into fixed interest analysis relates more to risk mitigation than other asset classes. In addition, we have also found the value added from an ESG incorporation strategy is more material to credit than to developed market SSA.
We have 5 types of ESG strategies:
- ESG incorporation
- Exclusion screens
- Sustainable (Best of Sector)
- ESG Thematic - Green, Social, Sustainability Bonds
- Active ownership/Engagement: directly & indirectly (via our Equity teams, Regnan)
The choice and combination of ESG strategies above is tailored to align with our views of how we can best manage the values and value (risk/return) objectives for the portfolio / clients.
Our process utilises internal ESG resources, including ESG data from Regnan, analysis from our equity teams, and insight from ESG specialists within our Investments and Product teams, along with external ESG resources including ESG research provided by MSCI and Rating Agencies.