PIMCO has incorporated ESG factors in the investment process for decades. Our process emphasizes rigorous analysis of broad secular trends, which are at the core of both global ESG trends and long-term asset returns. PIMCO has developed a robust platform specialized in supporting ESG-focused investment solutions based on our belief that ESG integration is essential to optimizing risk-adjusted returns over the long-term. For this reason, our investment process evaluates ESG risk factors from both the top-down (i.e. macro) and bottom-up (i.e. security specific) across our investment process.
From the top-down, the first and most important step in PIMCO's process is to correctly identify the major long-term themes that will impact the global economy and financial markets. PIMCO believes that such analysis is fundamental to making sound investment decisions. The firm's annual Secular Forums are devoted to identifying and analyzing these longer-term trends and the analysis of ESG-related issues fits directly into that process.
PIMCO blends its macro analysis with detailed bottom-up work. The firm's global credit research team and portfolio managers evaluate ESG-related issues as part of their corporate credit analysis and capital allocation decision-making processes.
PIMCO considers potential risks and opportunities that could affect particular issuers or industries, including those that are ESG-related. To facilitate the systematic integration of ESG risk factors in our analysis and help to monitor ESG related risks, we are continually enhancing our proprietary credit research software with specific ESG related attributes. In addition, we have hosted training sessions for our credit analysts on available ESG data and tools.
Importantly, PIMCO believes that by analyzing ESG risk factors alongside traditional financial risk factors, the firm will have a more complete picture of the risk and return opportunities that will ultimately help PIMCO to deliver better outcomes for its clients.
In addition to the broad process described above, PIMCO has launched a dedicated ESG Platform which targets attractive investment returns and positive impact. The platform builds on PIMCO's core ESG process, but adds a number of sustainability specific features. Exclusions, Evaluation, Engagement.
Firstly, on exclusions the objective is to restrict investment in issuers with business practices that are fundamentally misaligned with sustainability principles. The second feature of evaluation aims to evaluate all issuers from an ESG perspective in addition to fundamentals and emphasize those we consider to be "best-in-class". Thirdly, a proactive and collaborative engagement strategy ensures a continued communication process that seeks to influence issuers to improve their ESG-related business practices.