Chapter 9
ESG and Fixed Income Instruments
IN THIS CHAPTER
Looking at fixed income (bond) factors
Distinguishing differences among bond issuers
Spotlighting fixed income indexes
Categorizing types of ESG fixed income exposures
Bond investors have typically trailed their equity colleagues when integrating ESG factors into their portfolios. Contrary to stocks (see Chapter 8), bond investors’ primary focus is on alleviating the risk of default rather than gaining upside potential (which is naturally capped) and returning the principle invested (“Will we get our money back?”) at a future date. However, because of ESG’s increasing influence over credit ratings and investors’ increasing engagement with debt issuers, the fixed income sector is starting to play catch-up. Particularly given the distinct range of debt instruments, issuers, and maturities, fixed income investors are integrating ESG considerations into their analysis, as ESG investing expands to all areas of the market and ESG metrics help spot new risk factors.
Another consideration is that for many years, ESG investing wasn’t ...
Get ESG Investing For Dummies now with the O’Reilly learning platform.
O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.
