Fixed income

WORK STREAM MANAGER

Archie Beeching

 

Implementation Support Manager

The importance of responsible investment in fixed income cannot be overstated. On average,  pension funds around the world have 34% exposure to different types of debt. In recent years the Eurozone debt crisis, the sub-prime mortgage crisis, countless corporate downgrades or defaults due to corruption and other scandals have reminded investors just how much they stand to lose from an asset class that has historically been considered a safe haven.

Responsible investment is not a new thing, nor is it very different from orthodox investment strategies, it’s simply about doing things better. In a fixed income context it means thinking about how issues like environmental regulation, labour relations and corruption might affect issuers’ creditworthiness. Environmental, social and governance (ESG) factors are, ultimately, material to investment performance and institutional investors are increasingly using ESG analysis as a way of gaining additional insight into the value of a bond and of identifying the most serious risks in their portfolios.

About the work stream

The PRI Initiative works with its signatories to promote responsible investment in fixed income. The three main priorities of this work stream are to explore:

  • the extent to which ESG factors can be material to credit strength;
  • the different ways in which investors use ESG analysis in their investment process; and
  • exploring how debt holders can be more active stewards of their investments.