For much of the investment industry, committing to ESG (Environmental, Social and Governance) has become a recently-adopted core belief. A concept that was brought into focus  15 years ago at the 2005 Who Cares Wins conference, which examined its role in asset management and financial research, ESG has now become entrenched across the industry. Although there are still widely varying degrees of commitment to ESG, investing today in assets that adhere to these principles comfortably exceeds $US30 trillion – and is growing rapidly.
The third quarter capped the best year-to-date return for the Bloomberg Barclays US Aggregate Bond Index since the first nine months of 2002. Although bond prices may continue to advance, we anticipate lower returns may accompany a rise in volatility in coming quarters.
For fixed-income investors, understanding environmental, social and governance (ESG) factors – as they are financially material to performance – has proven to be critical in assessing an issuer’s fundamental quality.
