ESG and fixed income
I participated in a recent roundtable hosted by the LGC and chaired by Dawn Turner of the Brunel Pensions Partnership on the subject of incorporating ESG investment into fixed income investing. The ESG focus tends to be on equities but it is just as important on the Fixed Income side. The difference, as explained by Insight Investment, is that for bond investors it is a risk management tool much more than for equities. As such, it cannot just be an add-on but has to be an integral part of the due diligence process. And of course better ESG performance in fixed income may mean a lower total return for higher grade issuers because there is less credit risk. Even though bond holders don't have votes in most normal circumstances, one of the big takeaways is that they do have influence because most bond issuers will want to come back to the market for financing regularly. Excerpts from our discussion will be published in due course.