September 29, 2014
In order to support clients in integrating ESG in their fixed income assets, GES has launched a new product, GES Assessment on Government Bonds. It is fully aligned with the recent “Guidelines on Responsible Investment in Government Bonds” from the Danish Council on Corporate Responsibility.
Many institutional investors have a significant part of their AUM invested in fixed income, yet environmental, social and governance (ESG) issues have often not been integrated in the related decision-making to any greater degree. Following increased focus on responsible investment in government bonds, particularly in Denmark, GES has developed a new assessment tool leveraging its well-established screening for equity. This product provides an overview of international sanctions with relevance to government bonds and performs in-depth and fully updated research on potentially controversial countries.
Traditionally, country risk analysis has been based solely on standardised, ex post performance indicators, while the GES assessment is focused on trends and taking updated data into account. The assessment is updated bi-annually and investor clients received the first reporting in May, to be followed by the second edition in November 2014. Additionally, GES offers a monitoring service, where clients will be advised and receive updated assessments when new relevant sanctions are implemented or countries face sudden changes, for instance war actions or changes in regime. GES is closely following the situation in Russia/Ukraine, as well as monitoring developments in hot spots, such as Thailand, Iraq, and Egypt.
The Danish guidelines on responsible investment in government bonds were the first of its kind. They stress that institutional investors should have a responsible investment strategy for government bonds and recommend a strong focus on human rights. However, the guidelines also encourage investors to be careful with the exclusion of countries, as these may have negative impacts on the country’s ability to invest in education and poverty reduction. The guidelines conclude that it is essential to look at the trends in the country’s ESG performance. The full publication can be downloaded here.
PRI has subsequently followed suit with recently published “Fixed Income Investor Guide 2014”, which summarises the work within the Fixed Income Work Stream. This guide focuses more on sharing research and best practices in the field.
For further information, please contact:
Palle Ellemann, Client Manager Denmark and Product Manager