ESG issues can be a risk to fixed income returns like any other, and at TwentyFour we have embedded the assessment of these issues in our existing investment process and relative value models across the firm, with an integrated ESG framework used daily by portfolio managers for all strategies.
However, in recent years many investors have begun to consider sustainability a key element of their own investment objectives, and have sought products that specifically avoid investing in companies perceived to operate in an unsustainable way, either for their own business or wider society and eco system.
Unfortunately, especially within fixed income where ESG data availability can be poor compared to publically quoted equities, there are a range of definitions for and approaches to sustainable investing, and it is clear to us that many of these may not work for investors in the way they should.