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PIMCO overhauls ESG effort

19 January 2017

A new global platform has been launched today that selects investments using exclusion, evaluation and engagement

PIMCO has launched a dedicated global environmental, social and governance (ESG) investment platform and overhauled its related fund products range.

The ESG platform includes three key elements: exclusion, evaluation and engagement. Companies with business practices that are misaligned with sustainability principles are excluded from PIMCO’s ESG portfolios.  

Companies are also evaluated on their ESG credentials and those with the "best-in-class" ESG practices are favoured in these solutions.

The launch of the platform coincides with the launch of the PIMCO GIS Global Bond ESG Fund in the EMEA.

The new fund invests in a range of sovereign and investment grade global corporate bonds. It aims to maximise total returns while investing with issuers with favoued ESG practices. 

The fund is managed by a team led by Andrew Balls, managing director and CIO of global fixed income, and Alex Struc, portfolio manager, co-heading the ESG initiative at PIMCO.

"For many investors, screening out undesirable investment categories isn’t enough anymore - they want to use their investments to promote change in the world," said Balls.

Additionally, PIMCO has enhanced two of its socially responsible funds in the US to incorporate a wider range of ESG considerations into the investment process. These teams are managed by a team led again by Struc, and also Scott Mather, managing director and CIO for US core strategies.

The Total Return ESG and Low Duration ESG funds are additionally managed by Mark Kiesel and Jerome Schneider, respectively. The funds converted on 6 January.

AXA Investment Managers announced in July that it had designed a new smart beta equity ESG fund in a bid to allow responsible investment, while generating long-term returns and reducing risk. 

Approximately $90bn of "green bonds" were issued in 2016, more than double the volume of 2015. However HSBC expects the growth in issuance could slow to the $90bn - $120bn mark this year, mainly due to China and also on the back of policymakers refraining from intervening in the market.

A report by MSCI ESG Research earlier this month set out how Asia is lagging behind Europe when it comes to sustainable investing and stewardship, as reported by Global Investor on 12 January. Despite six Asian countries that have been developing stewardship codes since 2014 "the hard part starts in 2017".


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