ESG Integration – High Yield Fixed Interest

Aberdeen Standard Investments (ASI) are responsible investors and as such ensure Environmental, Social, and Governance (ESG) considerations are embedded in their investment process.

Core Beliefs

ESG factors are financially important and directly affect company performance, and further that companies that take their ESG responsibilities seriously tend to outperform their peers.

Understanding ESG risks and opportunities alongside other financial metrics helps in making better informed investment decisions.

We believe that informed and constructive engagement helps corporations to improve practises protecting and enhancing the value of our investments.

Investment Strategy and Process

The assessment of ESG factors is integrated into every stage of the Fixed Income investment decision making process with the goal of identifying all of the risks and opportunities within any given security.

How is this achieved?

There is an ESG network within the Fixed Income Investment team made up of credit analysts and portfolio managers.  These individuals drive ESG research, integration and discussion to help establish the ESG priorities and agenda, ensuring a comprehensive approach to ESG.

ESG is integrated into analysis in the following areas:

  • A bespoke risk framework is utilised to rate each issuer based on an analysis of low/medium/high ESG risks.  The individual E, S, or G companies are rated according to the likely impact on the creditor over different time frames and this is a powerful tool for running portfolios where there is a certain maturity/target/strategy.
  • Sector frameworks are utilised to identify material market risks, trends, and drivers of performance.
  • Companies are scored utilising a proprietary responsible (ESG) metric, looking at factors such as environmental management, climate risk assessment, board structure and strength, and stakeholder management.
  • Thematic research is conducted on global trends, to ascertain how these might impact fund investment.
  • Regular engagement with companies encourages them to remain ‘good’ companies and become even better businesses.

Engagement in Practise

  • Monitor – Ongoing Due Diligence

Business performance, company financials, corporate governance, company key risks and opportunities.

  • Context – Frequent disclosure

Senior Executives, Board Members, Heads of departments and Specialists, site visits.

  • Engage – Using our voice

Maximise influence as asset owners to drive positive outcomes, where possible leverage equity positions to vote on issues impacting Fixed Income assets.

  • Act – Consider all options

Increase or decrease holdings, collaborate with the investors, take legal action if necessary