ESG could create supply chain improvements
The majority of investment issuers could benefit from adopting better environmental, social, and governance (ESG) related business practices through better energy efficiency to supply chain improvements to addressing inequality, according to PIMCO.
PIMCO’s head of ESG portfolio management, Alex Struc, said by influencing business practices at this level, they believed that investors would be able to drive positive impact while still generating attractive return potential and securing capital.
“Many ESG investment options exist in the equities space, as well as in venture capital or project finance. However, investors should consider the extraordinary potential to drive positive change via their fixed income allocation, without sacrificing the potential for superior risk-adjusted returns,” he said.
The investment management firm said it had launched an ESG platform, PIMCO ESG Global Bond Fund, to meet the demand from clients looking to incorporate responsible and social considerations in fixed interest investing.
The platform’s process excluded companies with business practices that were misaligned with sustainability principles, but also evaluated their ESG credentials and favoured those with best-in-class ESG practices.
“Historically, this type of strategy has been pursued by equity investors but we firmly believe that engagement as a debt holder is equally important. Across the vast fixed income universe, small change can have an enormous positive impact,” Struc said.
PIMCO said the fund aimed to not compromise on investment returns to achieve social objectives by benchmarking itself against a traditional global bond benchmark, and invested in a range of sovereign and investment grade corporate bonds from around the world.
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