Edinburgh investment giant Abrdn said it has published an ESG-focused “Fixed Income Engagement Roadmap” to help shine a light “on this neglected global engagement issue.”
Abrdn said the ESG bond roadmap comes at a time “when bondholder stewardship is still very much in its infancy, long perceived as the domain of shareholders.”
ESG stands for Environmental, Social and Governance issues.
The asset manager said the roadmap “puts onto paper processes which Abrdn has been developing over a number of years.”
Abrdn manages and administers more than £500 billion of assets, and its fixed income (bond) team manages more than £130 billion of assets.
Abrdn said active fund ownership in the fixed income sector remains an exception rather than a norm, “with a lack of robust research or published policies.”
The company said: “In Abrdn’s case, we often find that our Fixed Income active engagement with non-listed issuers is the first time they’ve discussed ESG topics with an external stakeholder.”
Abrdn added: “While many investors have protocols for engaging with listed equity holdings, this is, to its knowledge, the first time an asset manager has published a roadmap for engaging with companies whose bonds it holds.
“With global bond markets worth approximately $141 trillion, there is clearly huge scope for investors to engage with bond issuers on Environmental, Social, and Governance (ESG) best practice.
“This strategic initiative reflects abrdn’s commitment to sustainability across all its asset classes, as well as a recognition that ESG factors will be critical in determining the long-term success of bond issuers.”
Marianne Zangerl, Deputy Head of Fixed Income and Head of ESG – Fixed Income and at Abrdn, said: “It seems that a huge number of bondholders do not realise the power they have to drive positive change – while also boosting their resilience of their portfolios.
“When we talk about investor engagement, many will automatically think about shareholders.
“Yet at Abrdn, we recognise that bondholders, as significant providers of capital, can also benefit from and effectively drive change through ESG engagements.
“After all, most primary-market financing occurs in the debt market – giving debt investors significant opportunities for engagement.
“In the fixed-income world, we deal not just with public companies but also private entities, high yield issuers, government municipalities, infrastructure projects and housing associations.
“This gives us great scope for driving positive impact. Often our engagement with non-listed issuers is the first time they’ve discussed ESG topics with an external stakeholder and our impact can be more influential than with large, publicly listed companies.”