14 Jul 2014

JANA survey: 88% of global fixed income managers consider ESG

An overwhelming majority (88%) of global fixed income managers believe Environmental, Social and Governance (ESG) factors influence the financial outcomes of fixed income investments, according to a JANA survey.

The inaugural JANA ESG in Fixed Interest Survey captured the responses of 63 of the world’s largest fixed income managers with a combined responsibility for $9.1 trillion in funds under management.

Fixed income managers rated governance as the most important factor influencing fixed income returns with 93% of respondents agreeing or strongly agreeing, followed by environmental 82% and social 73%.

Steven Carew, JANA’s Head of Investment Research & Outcomes said, “Contrary to popular belief, fixed income managers were found to be as well versed and developed in their thinking around ESG issues, as their listed equity counterparts.”

The survey showed that despite not having a seat at the voting table, fixed income managers take ESG factors very seriously.

“The proportion of managers that not only consider ESG factors important, but who integrate the considerations into their investment process is high, particularly for credit and emerging market debt investments,” said Mr Carew.

Out of the 62 managers that invest in credit, 85% indicated they consider ESG factors within their investment process. While out of the 47 responses from sovereign debt managers, 68% indicated they consider ESG factors.

Survey author Kirsten Temple, JANA Consultant and Head of the ESG Research Team said, “The number of sovereign debt managers considering ESG factors in the investment process was notably lower than credit managers.

“This may be because credit managers are exposed to similar risks as equity managers, with the same manager potentially holding both debt and equity in the same companies. Therefore some credit managers may be able to leverage broader research, and potentially ESG research, conducted by their in-house equity counterparts,” said Ms Temple.

The survey also asked managers to explain the major challenges to incorporating ESG into the investment process, with access to research and limited capacity to engage with issuers the most commonly cited obstacles.

JANA currently advises and manages $300 billion in assets for clients globally. JANA’s ESG team is dedicated to supporting clients who wish to integrate ESG factors into their investments.

For a copy of the JANA ESG in Fixed Interest Survey July 2014 please visit the JANA website.

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