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Key Takeaways From PIMCO's ESG Investing Report

Amid a global pandemic, challenge and uncertainty can serve to strengthen the bonds among communities, and inspire us to take action for a sustainable future.

We believe bonds are the foundation of a sustainable global recovery: the bonds that serve as investments and sources of capital, and also the human bonds that endure across communities, between nations, and among industries and investors. These are the bonds from which the world is building a more sustainable future.

In many ways, the COVID-19 pandemic has helped focus attention on core issues in ESG (environmental, social, and governance) investing: inclusive economies, healthy communities, safe and equitable workplaces, resilient supply chains, and alternative and cleaner energy. At PIMCO, these and other factors have long been embedded in our research, engagement, and investment decisions.

As we discuss in detail in PIMCO’s annual ESG Investing Report, we believe there is enough global capital to support a more sustainable global economy. To effect meaningful change, however, we need greater alignment among bond issuers, asset owners, and asset managers; all need to focus on achieving healthy and inclusive global growth.

Here, we highlight key takeaways from the report, with a focus on global partnerships and issuer engagement.

Partnerships: setting industry standards and driving market innovation

In order to drive a more globally coordinated sustainability effort, PIMCO contributes to key industry groups and multinational organizations. As one of the world’s leading fixed income investors, we are actively involved in innovating and growing the market for sustainable bonds, and we also advocate for improved climate and other sustainability disclosures. Transitioning the global economy to a more inclusive and lower-carbon future will require trillions of dollars of investment, representing a significant opportunity for investors, particularly in fixed income.

One important partnership is with the United Nations Global Compact (UNGC) CFO Taskforce for the Sustainable Development Goals (SDGs), which engages global CFOs on sustainable development, leveraging the nearly 10,000 companies participating in the UNGC. Scott Mather, CIO overseeing PIMCO’s ESG investing efforts, is co-chair of the taskforce, and in August 2020, PIMCO co-launched the “CFO Principles on Integrated SDG Investments and Finance.”

In the ESG Investing Report, learn more about PIMCO’s involvement with other industry groups, including the Task Force on Nature-related Financial Disclosures (TNFD), the International Capital Market Association (ICMA), the One Planet Asset Manager initiative, the Global Investors for Sustainable Development (GISD) Alliance, the Institutional Investors Group on Climate Change (IIGCC), and FAIRR (Farm Animal Investment Risk & Return), and how PIMCO helped advance their goals over the past year.

Bonds for change: issuer engagement

Issuer engagement is a cornerstone of PIMCO’s approach, given the strength and history of our platform. Unlike with stocks, bond issuers come back to the market regularly. Our credit research analysts engage regularly with the companies they cover; their discussions include ESG-related topics such as climate targets, human capital management, and board qualifications and composition, with a focus on positive impact and quantifiable outcomes. In 2020, PIMCO’s credit analysts engaged with more than 1,500 companies around the world on environmental, social, and governance topics. This engagement represents more than 80% of PIMCO’s firmwide holdings of corporate debt.

In 2020, the COVID-19 pandemic dominated many conversations. When engaging with issuers, we often focused on their pandemic-related resilience and responsibility: board and management oversight of COVID response, processes to review and adjust pandemic-related measures for the workforce and business operations, and coordination with suppliers to minimize pandemic-related disruptions.

For in-depth case studies of PIMCO’s ESG engagement with issuers across a range of industries and around the world, please read the ESG Investing Report.

Conclusion

For 50 years, PIMCO’s investment process has been dedicated to helping millions of investors pursue their objectives, regardless of shifting market conditions. We believe ESG integration and sustainable solutions are an essential part of our commitment to delivering on our clients’ objectives while supporting long-term, sustainable economic growth globally. Together with investors, issuers, asset owners, and asset managers, we can help align efforts to bring cohesive and meaningful change even sooner.

Read PIMCO’s annual ESG Investing Report for insights into sustainable bond markets, industry trends, and investing for a net-zero-carbon future. You can also visit our website dedicated to ESG investment approaches.

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Disclosures

London
PIMCO Europe Ltd
11 Baker Street
London W1U 3AH, England
+44 (0) 20 3640 1000

Dublin
PIMCO Europe GmbH Irish Branch,
PIMCO Global Advisors (Ireland)
Limited
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PIMCO Europe GmbH
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PIMCO Europe GmbH - Italy
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PIMCO (Schweiz) GmbH
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8002 Zurich, Switzerland
Tel: + 41 44 512 49 10

PIMCO Europe Ltd (Company No. 2604517) is authorised and regulated by the Financial Conduct Authority (12 Endeavour Square, London E20 1JN) in the UK. The services provided by PIMCO Europe Ltd are not available to retail investors, who should not rely on this communication but contact their financial adviser. PIMCO Europe GmbH (Company No. 192083, Seidlstr. 24-24a, 80335 Munich, Germany), PIMCO Europe GmbH Italian Branch (Company No. 10005170963), PIMCO Europe GmbH Irish Branch (Company No. 909462), PIMCO Europe GmbH UK Branch (Company No. BR022803) and PIMCO Europe GmbH Spanish Branch (N.I.F. W2765338E) are authorised and regulated by the German Federal Financial Supervisory Authority (BaFin) (Marie- Curie-Str. 24-28, 60439 Frankfurt am Main) in Germany in accordance with Section 32 of the German Banking Act (KWG). The Italian Branch, Irish Branch, UK Branch and Spanish Branch are additionally supervised by: (1) Italian Branch: the Commissione Nazionale per le Società e la Borsa (CONSOB) in accordance with Article 27 of the Italian Consolidated Financial Act; (2) Irish Branch: the Central Bank of Ireland in accordance with Regulation 43 of the European Union (Markets in Financial Instruments) Regulations 2017, as amended; (3) UK Branch: the Financial Conduct Authority; and (4) Spanish Branch: the Comisión Nacional del Mercado de Valores (CNMV) in accordance with obligations stipulated in articles 168 and 203 to 224, as well as obligations contained in Tile V, Section I of the Law on the Securities Market (LSM) and in articles 111, 114 and 117 of Royal Decree 217/2008, respectively. The services provided by PIMCO Europe GmbH are available only to professional clients as defined in Section 67 para. 2 German Securities Trading Act (WpHG). They are not available to individual investors, who should not rely on this communication.| PIMCO (Schweiz) GmbH (registered in Switzerland, Company No. CH-020.4.038.582-2) . The services provided by PIMCO (Schweiz) GmbH are not available to retail investors, who should not rely on this communication but contact their financial adviser.

Socially responsible investing is qualitative and subjective by nature, and there is no guarantee that the criteria utilized, or judgment exercised, by PIMCO will reflect the beliefs or values of any one particular investor.  Information regarding responsible practices is obtained through voluntary or third-party reporting, which may not be accurate or complete, and PIMCO is dependent on such information to evaluate a company’s commitment to, or implementation of, responsible practices.  Socially responsible norms differ by region.  There is no assurance that the socially responsible investing strategy and techniques employed will be successful.  Past performance is not a guarantee or reliable indicator of future results.

Statements concerning financial market trends or portfolio strategies are based on current market conditions, which will fluctuate. There is no guarantee that these investment strategies will work under all market conditions or are appropriate for all investors and each investor should evaluate their ability to invest for the long term, especially during periods of downturn in the market. Outlook and strategies are subject to change without notice.

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