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