ESG bond engagement improving with corporates

Pimco's latest ESG investing report finds that corporate issuer engagement rates are improving worldwide

Issuers of corporate debt are becoming more responsive to fund managers looking to engage on sustainability issues, according to research published by Pimco.

The company’s ESG Investing Report 2018 shows that issuer engagement last year was stronger than the previous 12 months, with 81% of corporate credit issuers responding to requests from the bond fund specialist, compared to 69% in 2017.

In a statement accompanying the findings, Scott Mather, chief investment officer, US core strategies, said global bond markets have a key role to play in steering companies’ long term behaviours.

“At over $100 trillion, global bond markets are essential to financing a sustainable future,” he said.

“Pimco is well positioned to spearhead this positive change and we integrate ESG analysis into our broad investment process. We do this because we believe it makes good investment sense, consistent with our goal of generating attractive risk-adjusted returns for our clients.”

The engagement response rate for European issuers was higher than that of North America, but marginally lagged Asia. European issuers responded to 96% of ESG engagement requests, compared to 79% in 2017. North American issuers responded 68% of the time, compared to 57% in 2017. Asian issuers maintained their 100% record for a second year.

Issuers in the retail and media industries had a 100% response rate, but the automotive industry saw half of corporate issuers ignore engagement requests. Engagement rates for real estate investment trusts (REITs) were also disappointing, with 55% responding in 2018, albeit up from 33% in 2017.

The full report is available to download here.