Understanding Investing

ESG into Action – How to Invest Sustainably in Fixed Income

ESG Miniseries 2 of 3: We believe the size of bond markets and recurring nature of debt issuance make fixed income investors a meaningful force in driving sustainable change.

More from this section

Read Transcript

Understanding PIMCO’s ESG Platform

Olivia Albrecht: We like to think of sustainable investing as a broad spectrum, from avoid on the one hand with negative exclusions and screening for some portfolios, all the way out to impact oriented strategies on the other end of the spectrum, where investors are looking to make a specific impact in a certain community or area with the investments that they’re making.

So there’s definitely a continuum within the sustainable investing space. There are many different ways of executing and building an ESG or sustainably oriented portfolio. Some of those strategies could include best in class approach, where you’re looking to utilize ESG scores to build portfolios that focus on higher scoring, ESG issuers.

Others are focused on specific sustainability themes like climate or gender. And then in between, there’s obviously a focal area on ESG integration, about how are managers incorporating ESG factors in a systematic or formal way into their broad investment process.

Our platform is composed of two key areas. The first is around ESG integration, and this is about how PIMCO is systematically incorporating material, environmental, and social factors into our broad investment process that touches the nearly $2 trillion of assets that we manage.

In addition, we have built portfolios that are designed to achieve traditional PIMCO style risk adjusted returns, but also achieve sustainability objectives.

As a pillar of our ESG strategies, we engage with issuers across the fixed income universe

I think our investors globally typically think of engagement in the context of equity holdings, where there are proxy votes and other levers to pull as an investor. What is it that we do as fixed income managers to drive change and engage with issuers?

Actively Engaging with Bond Issuers

Scott Mather: We’ve always believed in engaging with issuers that we’re investing in and doing our own research to supplement what’s available out there from others. And it’s a key part of our understanding of management’s quality and of how they think about stress testing their business, and therefore how we should think as investors about the investment risks of investing with them.

And so many times, there’s a constructive dialog back and forth about what is best practice, maybe what others are doing in the peer group that we as investors, and we think other investors, would like to see. They very much care about that.

There’s another way, though, and maybe even more direct way, that we have influence, and that’s many people forget that most bond issuers have to come back to the market quite frequently, and their ratings have a direct bearing on what it costs them in terms of debt servicing costs.

And so they naturally care what investors think. They care what rating agencies think. Investors like ourselves are in touch with all the major rating agencies.

And increasingly, sustainability factors are having a bearing on what people used the just call the traditional ratings, not to mention there’s more and more explicit ratings with respect to ESG risk out there, and much more attention paid to them.

So all of those things sort of go directly to the bottom line in terms of the company thinking about what the cost of debt service is likely to be.

Olivia Albrecht: We invite you to download your own copy of our ESG investing report on PIMCO.com/esg for more detail and to read some of our engagement stories from the past year.

Disclosure


IMPORTANT NOTICE

Please note that the following contains the opinions of the manager as of the date noted, and may not have been updated to reflect real time market developments. All opinions are subject to change without notice.

All investments contain risk and may lose value. Investing in the bond market is subject to risks, including market, interest rate, issuer, credit, inflation risk, and liquidity risk. The value of most bonds and bond strategies are impacted by changes in interest rates. Bonds and bond strategies with longer durations tend to be more sensitive and volatile than those with shorter durations; bond prices generally fall as interest rates rise, and low interest rate environments increase this risk. Reductions in bond counterparty capacity may contribute to decreased market liquidity and increased price volatility. Bond investments may be worth more or less than the original cost when redeemed.

Socially responsible investing is qualitative and subjective by nature, and there is no guarantee that the criteria utilized, or judgment exercised, by PIMCO will reflect the beliefs or values of any one particular investor.  Information regarding responsible practices is obtained through voluntary or third-party reporting, which may not be accurate or complete, and PIMCO is dependent on such information to evaluate a company’s commitment to, or implementation of, responsible practices.  Socially responsible norms differ by region.  There is no assurance that the socially responsible investing strategy and techniques employed will be successful.  Past performance is not a guarantee or reliable indicator of future results.

There is no guarantee that these investment strategies will work under all market conditions or are appropriate for all investors and each investor should evaluate their ability to invest long-term, especially during periods of downturn in the market.

This material contains the opinions of the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.

PIMCO as a general matter provides services to qualified institutions, financial intermediaries and institutional investors. Individual investors should contact their own financial professional to determine the most appropriate investment options for their financial situation. This is not an offer to any person in any jurisdiction where unlawful or unauthorized. | Pacific Investment Management Company LLC, 650 Newport Center Drive, Newport Beach, CA 92660 is regulated by the United States Securities and Exchange Commission. | PIMCO Europe Ltd (Company No. 2604517) and PIMCO Europe Ltd - Italy (Company No. 07533910969) are authorised and regulated by the Financial Conduct Authority (12 Endeavour Square, London E20 1JN) in the UK. The Italy branch is additionally regulated by the Commissione Nazionale per le Società e la Borsa (CONSOB) in accordance with Article 27 of the Italian Consolidated Financial Act. 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. | PIMCO Deutschland GmbH (Company No. 192083, Seidlstr. 24-24a, 80335 Munich, Germany), PIMCO Deutschland GmbH Italian Branch (Company No. 10005170963) and PIMCO Deutschland GmbH Spanish Branch (N.I.F. W2765338E) are authorised and regulated by the German Federal Financial Supervisory Authority (BaFin) (Marie- Curie-Str. 24-28, 60439 Frankfurt am Main) in Germany in accordance with Section 32 of the German Banking Act (KWG). The Italian Branch and Spanish Branch are additionally supervised by the Commissione Nazionale per le Società e la Borsa (CONSOB) in accordance with Article 27 of the Italian Consolidated Financial Act and the Comisión Nacional del Mercado de Valores (CNMV) in accordance with obligations stipulated in articles 168 and  203  to 224, as well as obligations contained in Tile V, Section I of the Law on the Securities Market (LSM) and in articles 111, 114 and 117 of Royal Decree 217/2008, respectively. The services provided by PIMCO Deutschland GmbH are available only to professional clients as defined in Section 67 para. 2 German Securities Trading Act (WpHG). They are not available to individual investors, who should not rely on this communication. | PIMCO (Schweiz) GmbH (registered in Switzerland, Company No. CH-020.4.038.582-2), Brandschenkestrasse 41, 8002 Zurich, Switzerland, Tel: + 41 44 512 49 10. The services provided by PIMCO (Schweiz) GmbH are not available to individual investors, who should not rely on this communication but contact their financial adviser. | PIMCO Asia Pte Ltd (Registration No. 199804652K) is regulated by the Monetary Authority of Singapore as a holder of a capital markets services licence and an exempt financial adviser. The asset management services and investment products are not available to persons where provision of such services and products is unauthorised. | PIMCO Asia Limited is licensed by the Securities and Futures Commission for Types 1, 4 and 9 regulated activities under the Securities and Futures Ordinance. PIMCO Asia Limited is registered as a cross-border discretionary investment manager with the Financial Supervisory Commission of Korea (Registration No. 08-02-307). The asset management services and investment products are not available to persons where provision of such services and products is unauthorised. | PIMCO Australia Pty Ltd ABN 54 084 280 508, AFSL 246862. This publication has been prepared without taking into account the objectives, financial situation or needs of investors. Before making an investment decision, investors should obtain professional advice and consider whether the information contained herein is appropriate having regard to their objectives, financial situation and needs. | PIMCO Japan Ltd, Financial Instruments Business Registration Number is Director of Kanto Local Finance Bureau (Financial Instruments Firm) No. 382. PIMCO Japan Ltd is a member of Japan Investment Advisers Association and The Investment Trusts Association, Japan. All investments contain risk. There is no guarantee that the principal amount of the investment will be preserved, or that a certain return will be realized; the investment could suffer a loss. All profits and losses incur to the investor. The amounts, maximum amounts and calculation methodologies of each type of fee and expense and their total amounts will vary depending on the investment strategy, the status of investment performance, period of management and outstanding balance of assets and thus such fees and expenses cannot be set forth herein. | PIMCO Taiwan Limited is managed and operated independently. The reference number of business license of the company approved by the competent authority is (107) FSC SICE Reg. No.001. 40F., No.68, Sec. 5, Zhongxiao E. Rd., Xinyi Dist., Taipei City 110, Taiwan (R.O.C.), Tel: +886 2 8729-5500. | PIMCO Canada Corp. (199 Bay Street, Suite 2050, Commerce Court Station, P.O. Box 363, Toronto, ON, M5L 1G2) services and products may only be available in certain provinces or territories of Canada and only through dealers authorized for that purpose. | PIMCO Latin America Av. Brigadeiro Faria Lima 3477, Torre A, 5° andar São Paulo, Brazil 04538-133. | No part of this publication may be reproduced in any form, or referred to in any other publication, without express written permission. PIMCO is a trademark of Allianz Asset Management of America L.P. in the United States and throughout the world. ©2020, PIMCO.

CMR2020-0731-1289432

Filters: Reset All

Filters

Close Filters Dropdown
  • Tags

    Reset

    Close
  • Category

    Reset

    Economic and Market Commentary
    Investment Strategies
    Bond by Bond
    Viewpoints
    Careers
    Education
    PIMCO Foundation
    View from the Investment Committee
    Close
  • Order By

    Reset

    Alphabetical
    Most Recent
    Close
() filters applied

Multimedia Finder

Filter By:
  • Economic and Market Commentary
  • Investment Strategies
  • Bond by Bond
  • Viewpoints
  • Careers
  • Understanding Investing
  • View from the Investment Committee
  • A
  • B
  • C
  • D
  • F
  • G
  • H
  • I
  • K
  • M
  • P
  • R
  • S
  • T
  • W
Clear
Tina Adatia
Fixed Income Strategist
Olivia A. Albrecht
Head of ESG Business Strategy
Joshua Anderson
Head of Global ABS Portfolio Management
Robert Arnott
Founder and Chairman, Research Affiliates
Andrew Balls
CIO Global Fixed Income
Justin Blesy
Asset Allocation Strategist
David L. Braun
Head of US Financial Institutions Portfolio Management
Jelle Brons
Portfolio Manager, Global Investment Grade Credit
Erin Browne
マルチアセット戦略担当ポートフォリオ・マネージャー
Libby Cantrill
Executive Office, Public Policy
Stephen Chang
Portfolio Manager, Asia
Pramol Dhawan
Head of Emerging Markets Portfolio Management
Joachim Fels
Global Economic Advisor
David Fisher
Head of Traditional Product Strategies
Adam Gubner
Portfolio Manager, Distressed Debt
Gregory Hall
Head of U.S. Global Wealth Management
Daniel H. Hyman
Head of Agency MBS Portfolio Management
Daniel J. Ivascyn
Group Chief Investment Officer
Mark R. Kiesel
CIO Global Credit
Ryan Korinke
Head, Hedge Fund and Quantitative Strategies
Jason Mandinach
Head of Alternative Credit and Private Strategies
Scott A. Mather
CIO U.S. Core Strategies
Mohit Mittal
Portfolio Manager, Liability Driven Investment and Credit
James Moore
Alfred T. Murata
Portfolio Manager, Mortgage Credit
John Murray
Portfolio Manager, Commercial Real Estate
Sonali Pier
Portfolio Manager, Multi-Sector Credit
Steve A. Rodosky
Portfolio Manager, Real Return and Long Duration
Emmanuel Roman
Chief Executive Officer
Steve Sapra
Client Solutions & Analytics
Jerome M. Schneider
Head of Short-Term Portfolio Management
Marc P. Seidner
CIO Non-traditional Strategies
Greg E. Sharenow
Portfolio Manager, Real Assets
Anmol Sinha
Fixed Income Strategist
Cathy Stahl
Global Head of Marketing
Christian Stracke
Global Head of Credit Research
Geraldine Sundstrom
Portfolio Manager, Asset Allocation
Richard Thaler
シカゴ大学ブース・スクール・オブ・ビジネス 経済学・行動科学専門特別教授
Jessica K. Tom
Senior Credit Analyst
Jamie Weinstein
Portfolio Manager, Head of Corporate Special Situations
Tiffany Wilding
North American Economist
Andrew T. Wittkop
Portfolio Manager, Treasuries, Agencies, Rates
PIMCO
Chris Brightman
  • Alphabetical
  • Most Recent
Section : Date : Experts :
Reset All
Looking for Alternatives?  Access New Opportunities with PIMCO
Finding Resiliency in a Long Recovery
Straight From PIMCO: What We’re Watching in Emerging Markets
Why Active Fixed Income Matters More Today
Straight from PIMCO: Time to Be Conscious of Your Cash
Sustainability in Bond Markets – Three Reasons for Optimism

Load more results Load {{cCtrl.fetchResults}} more results