Integrating ESG Factors into Fixed Income Analysis

"Integration of ESG is a process, and an education."

This is a critical point, that ESG integration is a process, not a result.

With what result? We expect to generate better long-term risk-adjusted returns.

And it is no small feature than along the way, the integration of ESG factors into Fixed Income processes across the investment industry will help allocate capital in more efficient ways, resulting in better societal outcomes.

But investing is also understanding the risks. That’s why we are very focused on risk-adjusted returns. In simple form, all investing is identifying the risks, avoiding undesirable risks, selecting which risks to accept to generate a return, and pricing them. A central investment goal of ESG integration is ongoing improvement in the identification and pricing of risks.

Equity investors own the company -- one might say a Responsible equity investor aims to be a good steward. By contrast, bond investors finance the activities of a company or country. A Responsible debt investor aims to ensure that financing is allocated to companies to pursue sustainable activities...
  • Nicolas Forest
    Nicolas Forest
    Global Head of Fixed Income
  • Philippe Noyard
    Global Head of Credit & Deputy Global Head of Fixed Income

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