ESG investing has become increasingly popular in recent years. Many major financial institutions have incorporated ESG factors into their investment analysis and decision-making process. The PIMCO ESG Investing 2017 Report systematically elaborates how PIMCO applies its mature ESG platform to assist investment research and build ESG-related strategies. The report affirms the multiple functions of ESG process in risk control, sustainability and long-term return generation.
PIMCO’s 25 Years of ESG Investment Philosophy and Strategies
Tracing back to early 1990s, PIMCO has implemented its own social responsibility strategies by launching one of the first socially responsible fixed income funds in the industry in 1991. Over the years, PIMCO continued enriching the concept by developing ESG scoring methodology and building the unique ESG platform. Nowadays it has a series of seasoned ESG strategies and portfolios.
How PIMCO’s ESG Factors Help Screening Investment Risks
The ESG scoring under PIMCO’s methodology covers various topics evaluating a company’s sustainability profile. For example, the theme of Pollution & Waste examines enterprises’ preparation for toxic emissions and waste materials handling, etc. Companies with insufficient contingency plans tend to have greater liability risks when accidents occur.
PIMCO’s Study Shows ESG Strategies Outperform Benchmark
PIMCO compared two types of equity portfolio strategies focusing on high ESG scores against global benchmark. The results illustrate that either portfolios inherently with high ESG ratings or those with sharply increased ESG ratings in near term are able to generate higher returns than benchmark over the past eight years.
The Promising Future for the Burgeoning ESG Investment
With the increasing awareness of environmental and social responsibilities worldwide, ESG factors and responsible investment philosophies have experienced robust growth globally. According to survey, ESG incorporation has penetrated into over a quarter of total global AUM as of 2016. This share is expected to continue rising.
In conclusion, the PIMCO ESG Investing 2017 Report reviews PIMCO’s long dedication in ESG investment and demonstrates the ESG methodology’s various merits in assisting risk management, improving screening accuracy and achieving sustainable, long-run returns.