Fixed income

While different from equity investors, who own a share of the entities in which they invest, fixed income investors also play an important role in promoting the responsible investment agenda.

Considering ESG factors can enhance risk assessments and as lenders of capital, fixed income investors can contribute to funding more sustainable business and growth models. The resources below can facilitate the incorporation of ESG factors in fixed income analysis and inform engagement on ESG topics within fixed income asset classes. To hear more about our fixed income work, contact us.

Fixed income workstreams

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Credit risk and ratings

The PRI is facilitating a dialogue between credit ratings agencies and investors to cultivate a common language, discuss ESG risks to creditworthiness and bridge disconnects.

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Private debt

ESG incorporation in private debt provides LPs and GPs with additional credit risk insights throughout the deal cycle.

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Securitised debt

ESG incorporation in securitised is in its infancy compared to other fixed income sub-asset classes, although the discussion is quickly evolving from why to how.

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Sovereign debt

A more explicit and systematic consideration of ESG factors can enhance risk assessments of government bonds and help drive change towards more sustainable growth models.

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Sub-sovereign debt

While sub-sovereign issuers vary greatly, they often need funding to finance public services and infrastructure, which have a clear link to ESG outcomes. Investors are increasingly — and systematically — incorporating ESG factors into their risk assessment of local authorities’ debt, as well as recognising the important role that sub-sovereign entities can play in achieving sustainable and resilient growth.

Fixed Income Resources

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An introduction to responsible investment: fixed income

A must-read for those considering how to incorporate ESG factor in valuations within fixed income.

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ESG engagement for fixed income investors

Principle 2 of the six Principles encourages investors to be active stewards of their investments and incorporate ESG factors into their ownership policies and practices across different asset classes.

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Broadening the outreach to investment consultants

Investment consultants are critical stakeholders in the investment chain, advising institutional asset owners on a range of issues, including the selection, appointment and monitoring of external managers.

Other Fixed Income Resources

Fixed income investor guide

Fixed income investor guide

The Fixed income investor guide summarises the unique characteristics of fixed income with its various subcategories of issuers and instruments. It helps to explain why fixed income investors should take a bottom-up approach to RI while borrowing from the experiences of other asset classes, such as listed equities.

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Corporate bonds: spotlight on ESG risks

In light of the 2008 financial crisis, which led to a loss of confidence in the underlying structure and operation of international financial markets, this publication is intended for corporate bondholders to explore ESG issues and determine whether they are material to creditworthiness and investment performance.