MORE ON BLUEBAY’S APPROACH TO ESG
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Where are banks on their ESG journey?
The banks are on a journey, and I think you can see how in the future they will continue to be the conduit for policies and for regulatory change within the ESG sector. Just as capital has improved over the last 10 years, driven by regulation, you can see how the sustainability policies that are driven by the regulator will be facilitated into the real economy via the banks.
If we think there is EUR 4.7 trillion of spending needed over the next 10 years to meet the 2030 targets, EUR 3.5 trillion of that will come through the private sector, and the banks will play a huge part in that.
How does BlueBay incorporate social factors into its investment approach?
BlueBay incorporates social factors into what we do because we think it helps us to make better informed investment decisions. We have a firmwide in-house proprietary ESG integration framework, where our investments are evaluated formally across specific and foundational ESG topics. All issuers must address these irrespective of their economic activity, geographical footprint or size.
We overlay that framework with any relevant issues specific to that entity. For a corporation it would be the context of its economic activity, key ESG risks given its geographical footprint and any acute ESG concerns. We then look at risk exposure issues and couple those with how well the company is mitigating those risks and how it is positioned to identify and leverage any opportunities.
It is about management quality, and here we are looking at the policies and systems and any initiatives the company has
Human rights help avoid downside risk, and that is important for us as fixed-income investors
What key themes are you seeing in relation to the social aspect of ESG?
The social aspects of ESG are related to issues that arise for a company or a sovereign when they're interacting with their key stakeholders. This can include internal stakeholders like their employees, or external ones like suppliers, customers, regulators, policymakers and competitors.
Social issues have always been there, even while environmental issues have been front and centre stage. However, the Covid pandemic really brought them to the fore. In the workplace, Covid squared the focus on how companies engage with their workforce and how they address the issues of inclusion, diversity and engagement.
The pandemic highlighted that companies need to be more flexible, more agile, and need to think about the health and wellbeing of their employees to attract a wider pool of capital. Going forward, employee engagement and the ability to access talent will be key.
Covid also highlighted the issue of supply chain integrity and supply chain human rights; these will continue to be strong social themes.
Interestingly, environmental issues like climate change have a strong social dimension. If we are to make a low carbon transition, we need a just transition. We need to bring along workers, communities and all the other stakeholders in a just way, otherwise the transition will not be sustainable.
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The Covid pandemic brought social issues to the fore, and now investors are recognising the role that human rights stewardship can play in avoiding downside risk.
My-Linh Ngo, Head of ESG Investment at BlueBay Asset Management, highlights the key themes she is seeing on the social side of ESG and how BlueBay integrates social factors into its investment approach.
INTRODUCTION | VIDEO INTERVIEW | KEY THEMES | INVESTMENT OPPORTUNITIES | BLUEBAY’S APPROACH
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Three
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My-Linh Ngo, Head of ESG Investment and Portfolio Manager at BlueBay Asset Management, on the growing importance of the “S” in ESG
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INTRODUCTION
What investment opportunities does human rights stewardship provide?
Human rights help avoid downside risk, and that is important for us as fixed-income investors. For us, it is about capital preservation, and human rights stewardship can be helpful here.
If a company is proactive, it is more likely to have a better social license to operate. It will have a better reputation and should be able to avoid breaking laws, getting fines, having large liabilities or facing boycotts.
Opportunity also comes from identifying those companies that are going to be winners. If an entity has a more proactive approach to human rights, it is more likely to anticipate, respond to and be in tune with any changes in sentiment or expectations from customers or regulators. If a company is better able to respond to those issues, we think it is more likely to be financially successful.
So, understanding how companies are addressing human rights can enable us to identify the winners and hopefully avoid the losers.
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This video may be issued by the following entities: in the European Economic Area (EEA), by BlueBay Funds Management Company S.A. (the ManCo), which is regulated by the Commission de Surveillance du Secteur Financier (CSSF). In Germany and Italy, the ManCo is operating under a branch passport pursuant to the Undertakings for Collective Investment in Transferable Securities Directive (2009/65/EC) and the Alternative Investment Fund Managers Directive (2011/61/EU).In the United Kingdom (UK) by BlueBay Asset Management LLP (BBAM LLP), which is authorised and regulated by the UK Financial Conduct Authority (FCA), registered with the US Securities and Exchange Commission (SEC) and is a member of the National Futures Association (NFA) as authorised by the US Commodity Futures Trading Commission (CFTC). In United States, by BlueBay Asset Management USA LLC which is registered with the SEC and the NFA. In Switzerland, by BlueBay Asset Management AG where the Representative and Paying Agent is BNP Paribas Securities Services, Paris, succursale de Zurich, Selnaustrasse 16, 8002 Zurich, Switzerland. The place of performance is at the registered office of the Representative. The courts of the registered office of the Swiss representative shall have jurisdiction pertaining to claims in connection with the distribution of shares in Switzerland. The Prospectus, the Key Investor Information Documents (KIIDs), where applicable, the Articles of Incorporation and any other applicable documents required, such as the Annual or Semi-Annual Reports, may be obtained free of charge from the Representative in Switzerland. In Japan, by BlueBay Asset Management International Limited which is registered with the Kanto Local Finance Bureau of Ministry of Finance, Japan. In Australia, BlueBay is exempt from the requirement to hold an Australian financial services license under the Corporations Act in respect of financial services as it is regulated by the FCA under the laws of the UK which differ from Australian laws. In Canada, BBAM LLP is not registered under securities laws and is relying on the international dealer exemption under applicable provincial securities legislation, which permits BBAM LLP to carry out certain specified dealer activities for those Canadian residents that qualify as "a Canadian permitted client”, as such term is defined under applicable securities legislation. The BlueBay group entities noted above are collectively referred to as “BlueBay” within this document. The registrations and memberships noted should not be interpreted as an endorsement or approval of BlueBay by the respective licensing or registering authorities.
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It is about management quality, and here we are looking at the policies and systems and any initiatives the company has. We ultimately look at performance and how they are doing on the ground. For us to be able to gauge all of that, it really comes down to a company’s level of public disclosure.
One thing we are particularly proud of in terms of our framework is that the process is jointly owned by our investment professionals and our ESG professionals, so we have that joint accountability and ownership. Those complementary insights and perspectives help us to make better investment decisions.
INTRODUCTION | VIDEO INTERVIEW | KEY THEMES | INVESTMENT OPPORTUNITIES | BLUEBAY’S APPROACH
BLUEBAY’S APPROACH
INVESTMENT OPPORTUNITIES
KEY THEMES
VIDEO INTERVIEW
INTRODUCTION
It is about management quality, and here we are looking at the policies and systems and any initiatives the company has. We ultimately look at performance and how they are doing on the ground. For us to be able to gauge all of that, it really comes down to a company’s level of public disclosure.
One thing we are particularly proud of in terms of our framework is that the process is jointly owned by our investment professionals and our ESG professionals, so we have that joint accountability and ownership. Those complementary insights and perspectives help us to make better investment decisions.
