The PRI discusses with representatives from CRAs (Moody’s Investors Service and S&P Global Ratings), investors (Barings and PIMCO) and a bond issuer (NRG) the challenges of ESG in credit risk during a panel session at the San Francisco conference on Responsible Investment in Fixed Income this January.
Climate (or climate-aligned) bonds refer to labelled and unlabelled bonds for which proceeds are intended to finance projects and activities that contribute to a low-carbon and climate-resilient economy. Green bonds refers to explicitly labelled bonds for which the proceeds will be exclusively used
The shift towards renewable energy is building, recording its highest growth rate of any energy source recorded in 2017.
While many investors may consider phasing out thermal coal alongside reductions to other fossil fuel assets (such as oil sands, crude oil, natural gas and metallurgical coal), this section focuses on thermal coal assets as a starting point due to their high CO2 content (and potential for carbon
Issuer engagement on ESG factors is becoming increasingly commonplace. Investors are starting to formalise their engagement as an integral part of their approaches to responsible investment.
Principle 5 of the six Principles encourages collaboration by investors to enhance the effectiveness of their responsible investment approach.
Despite the motivations for engagement laid out earlier in this report, there remains significant inertia among fixed income investors to engage.