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PIMCO

PRI reporting framework 2020

You are in Strategy and Governance » ESG issues in asset allocation

ESG issues in asset allocation

SG 13. ESG issues in strategic asset allocation

13.1. Indicate whether the organisation carries out scenario analysis and/or modelling, and if it does, provide a description of the scenario analysis (by asset class, sector, strategic asset allocation, etc.).

Describe PIMCO’s ESG specialists designed proprietary tools, looking within and across fixed income markets globally, to help credit analysts evaluate potential impact of extreme weather events, the transition to a low-carbon economy, and other factors related to climate change., notably based on scenario analysis.

13.2. Indicate if your organisation considers ESG issues in strategic asset allocation and/or allocation of assets between sectors or geographic markets.

We do the following

          This analysis is carried out in the context of ESG assessments and ESG ratings that are incorporated firm-wide into our credit research.
        

13.3. Additional information. [OPTIONAL]


SG 13 CC.

13.4 CC. Describe how your organisation is using scenario analysis to manage climate-related risks and opportunities, including how the analysis has been interpreted, its results, and any future plans.

Describe

The overarching objective is to explore ways to enhance PIMCO’s investment resilience against the tested scenarios.

In practice, we seek to translate climate-related data available at scale (e.g. portfolio-level) into granular metrics that are actionable in the context of PIMCO’s credit analysts’ assessments and investment decisions.   To help analysts evaluate climate risk, PIMCO’s ESG specialists designed proprietary tools. The insights these tools provide are intended to help portfolio managers to better manage and mitigate climate-related credit risks and align ESG dedicated portfolios with the Paris Agreement targets – as always, working within specific portfolio objectives and guidelines. These analytical frameworks serve the whole spectrum of PIMCO’s ESG-specific and broader investment strategies and enable PIMCO’s ESG dedicated strategies to align with the recommendations of the TCFD. This covers both our evaluation of issuers and our engagement with them. Indeed, this an iterative process in that, for example, conclusions at the issuer level are to the extent feasible informed by issuer’s disclosure and in turn also help assess the gaps in their reporting on climate -related risk scenarios and their strategy, which PIMCO seeks to address when engaging with them as bondholder (including in the context of the Climate Action 100+ initiative).

As one example of tool that informs our scenario analysis, we assess the average technology and energy mix of a portfolio compared with global energy scenarios modeled by the International Energy Agency (IEA), including the potential impact of green bonds, considering their specific environmental features and issuer-level data. The output is a comparison of PIMCO’s ESG portfolio with current and future IEA estimates of Paris-aligned portfolios

Describe

The overarching objective is to explore ways to enhance PIMCO’s investment resilience against the tested scenarios.

In practice, we seek to translate climate-related data available at scale (e.g. portfolio-level) into granular metrics that are actionable in the context of PIMCO’s credit analysts’ assessments and investment decisions.   To help analysts evaluate climate risk, PIMCO’s ESG specialists designed proprietary tools. The insights these tools provide are intended to help portfolio managers to better manage and mitigate climate-related credit risks and align ESG dedicated portfolios with the Paris Agreement targets – as always, working within specific portfolio objectives and guidelines. These analytical frameworks serve the whole spectrum of PIMCO’s ESG-specific and broader investment strategies and enable PIMCO’s ESG dedicated strategies to align with the recommendations of the TCFD. This covers both our evaluation of issuers and our engagement with them. Indeed, this an iterative process in that, for example, conclusions at the issuer level are to the extent feasible informed by issuer’s disclosure and in turn also help assess the gaps in their reporting on climate -related risk scenarios and their strategy, which PIMCO seeks to address when engaging with them as bondholder (including in the context of the Climate Action 100+ initiative).

As one example of tool that informs our scenario analysis, we assess the average technology and energy mix of a portfolio compared with global energy scenarios modeled by the International Energy Agency (IEA), including the potential impact of green bonds, considering their specific environmental features and issuer-level data. The output is a comparison of PIMCO’s ESG portfolio with current and future IEA estimates of Paris-aligned portfolios

Describe

The overarching objective is to explore ways to enhance PIMCO’s investment resilience against the tested scenarios.

In practice, we seek to translate climate-related data available at scale (e.g. portfolio-level) into granular metrics that are actionable in the context of PIMCO’s credit analysts’ assessments and investment decisions.   To help analysts evaluate climate risk, PIMCO’s ESG specialists designed proprietary tools. The insights these tools provide are intended to help portfolio managers to better manage and mitigate climate-related credit risks and align ESG dedicated portfolios with the Paris Agreement targets – as always, working within specific portfolio objectives and guidelines. These analytical frameworks serve the whole spectrum of PIMCO’s ESG-specific and broader investment strategies and enable PIMCO’s ESG dedicated strategies to align with the recommendations of the TCFD. This covers both our evaluation of issuers and our engagement with them. Indeed, this an iterative process in that, for example, conclusions at the issuer level are to the extent feasible informed by issuer’s disclosure and in turn also help assess the gaps in their reporting on climate -related risk scenarios and their strategy, which PIMCO seeks to address when engaging with them as bondholder (including in the context of the Climate Action 100+ initiative).

As one example of tool that informs our scenario analysis, we assess the average technology and energy mix of a portfolio compared with global energy scenarios modeled by the International Energy Agency (IEA), including the potential impact of green bonds, considering their specific environmental features and issuer-level data. The output is a comparison of PIMCO’s ESG portfolio with current and future IEA estimates of Paris-aligned portfolios

13.5 CC. Indicate who uses this analysis.

13.6 CC. Indicate whether your organisation has evaluated the potential impact of climate-related risks, beyond the investment time horizon, on its investment strategy.

Describe

The potential impact of climate-related risks is assessed in the context of PIMCO’s ESG strategies and evaluation that places a particular emphasis on long-term risk factors, with climate change being  a case in point.

13.7 CC. Indicate whether a range of climate scenarios is used.

13.8 CC. Indicate the climate scenarios your organisation uses.

Provider
Scenario used
IEA
IEA
IEA
IEA
IEA
IRENA
Greenpeace
Institute for Sustainable Development
Bloomberg
IPCC
IPCC
IPCC
IPCC
Other
Other
Other

SG 14. Long term investment risks and opportunity

14.1. Some investment risks and opportunities arise as a result of long term trends. Indicate which of the following are considered.

other description (1)

          We endorse the SDGs as the holistic reference framework to assess other wide-ranging risks e.g. inequality.
        

14.2. Indicate which of the following activities you have undertaken to respond to climate change risk and opportunity

14.3. Indicate which of the following tools the organisation uses to manage climate-related risks and opportunities.

other description

          Exposure to issuers with Paris Agreement-alignment targets and pathways, e.g.,  based on the Science-based targets and methods, including sectoral decarbonisation approach
        

14.5. Additional information [Optional]


SG 14 CC.


SG 15. Allocation of assets to environmental and social themed areas (Private)


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