NordSIP
Nordic Sustainable Investments
20 June 2018

 

ESG opens doors into EM Corporate Debt

Stockholm (NordSIP) – While responsible investment has grown fast over the past couple of years, the proportion of assets in fixed income portfolios that follow a sustainable investment strategy is still much lower than in equities. In the arena of emerging market corporate debt, the concept of ESG integration becomes downright niche. Yet several academic studies show a positive relationship between ESG and financial performance. More remarkably, the favourable effect is stronger in fixed income and in emerging markets than in equities and developed markets. This year, the Emerging Market Fixed Income team at Union Bancaire Privée (UBP) launched a product in that exact place. NordSIP spoke to Karine Jesiolowski (pictured), Senior Investment Specialist – Emerging Fixed Income and Member of UBP ESG Committee to discuss the rationale behind this strategy.

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“Engagement should always be part of the investment process as well, and not just an afterthought. While opening a dialogue with a company on ESG issues, a credit analyst can observe the company’s reaction. Are they listening? Are they prepared? Sometimes, the process will highlight differences of opinion between our analyst and the rating. We don’t use external data bluntly, but it helps get the conversation started. We also use GES as engagement manager, especially in the case of more important controversies or when we find it useful to pull together many investors, including those on the equity side.”

 

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