Active fixed income investors play a critical role in the transition to more sustainable companies and economies.
We've entered a new era for ESG (environmental, social, governance) investing. The global pandemic revealed and magnified a range of social issues, while the threat of climate change is escalating. These have profound implications for investors and other stakeholders as the market for ESG-related assets continues to grow.
Here, we highlight select takeaways from the full report, with a focus on issuer engagement, climate-related portfolio considerations, and social themes.
Issuer engagement fosters constructive change
PIMCO actively and consistently engages with bond issuers, including companies, governments, and others, to address ESG themes. In these discussions we seek to understand ESG strategies and risks, and encourage innovations such as issuance of sustainability-linked and ESG labelled bonds.
While climate change and ESG labelled bonds remain our primary engagement focus areas, we emphasized additional themes in 2021:
Global banks and net zero: PIMCO engaged more than 20 global banks on implementation of their carbon emission strategies, including lending policies.
Deforestation: We engaged more than 20 food manufacturers, retailers, and banks about eliminating deforestation in their value chains.
Methane emissions: Methane is a major contributor to global warming, and the energy sector is the second-largest source of methane emissions (after agriculture) according to the International Energy Agency. PIMCO engaged with more than 50 energy companies on reducing methane emissions.
Nutrition: Food companies play a key role in mitigating the economic and social risks of malnutrition. PIMCO engaged with nutrition specialists at a number of these companies and discussed investors' expectations on their nutrition strategy and disclosure.
Our annual ESG Investing Report provides detailed case studies on engagement efforts and outcomes.
This post is funded by PIMCO
For Professional Investors Only.
PIMCO Europe Ltd (Company No. 2604517) is authorised and regulated by the Financial Conduct Authority (12 Endeavour Square, London E20 1JN) in the UK. PIMCO Europe Ltd services are available only to professional clients as defined in the Financial Conduct Authority's Handbook and are not available to individual investors, who should not rely on this communication. ©2022, PIMCO
Past performance is not a guarantee or a reliable indicator of future results.
