- ESG investing approaches in fixed income remain similar to when investing in equities
- Data, sophisticated analytical tools, increased disclosure and transparency from companies have helped asset managers to set up ESG scoring frameworks
- Sustainable investing adds value by strengthening the quality of assets, mitigating risk and building resilience in our portfolios
During the Investing in a better future through the lens of a fixed income investor webinar hosted by Endowus (31 March 2021), panellists including UOB Asset Management’s Head of Sustainability Office, Victor Wong, spoke about the drivers behind the Environmental, Social and Governance (ESG) investing momentum, including developments in Asia.
During the session, Victor highlighted that the approach for ESG investing in fixed income remains quite similar to when investing in equities. He shared that while it initially seemed smoother to integrate ESG considerations in equities, there has been evidence of outperformance and lower volatilities in fixed income.
Victor also highlights that the availability of more data with the help of more sophisticated analytical tools and more disclosure and transparency from sustainable companies have helped asset managers to set up ESG scoring frameworks to track and better manage investment portfolios in the ESG space.
On the topic of specific industries that tend to score better in an ESG fund, Victor shared that it is not as straightforward when looking at specific industries because the levels of disclosures may not be the same in different markets.
He stresses the importance of adapting and modifying ESG scores to account for different levels of ESG development in different countries. It is also just as important to consistently engage with the companies to understand where their sustainable growth path lies.
He adds that investing sustainably adds value by strengthening the quality of assets we hold, mitigating risk and building resilience in our portfolios. Rounding up, Victor shares that despite the challenges presented to us today, if approached with the right strategies, can be turned into opportunities.
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