News

ESG: why lack of country data is problematic for bondholders

ESGGovernment bonds make up much of the fixed income universe, but this is a problem for bondholders as environmental, social and governance (ESG) factors for countries are less developed than for corporates. According to NN Investment Partner’s head of fixed income and responsible investing, Edith Siermann, ESG data on countries is often outdated. “To close this gap, we need better ESG data on countries, as this is often outdated or lagging. In addition, investors across all asset classes have significant and often justified concerns about greenwashing and a lack of transparency,” she tells Funds Europe. Improved data usage can lead to a better risk-return profile in investment portfolios and ultimately contribute to a more sustainable financial system, she says. Like Siermann, index provider MSCI’s vice-president, fixed income and ESG research, Kevin Kwok, believes there is the need for better information. In high yield and emerging markets, he says, the proportion of small-cap and private companies is higher. Often regulations are more lax and disclosures are at a bare minimum, so analysts must rely on the bond prospectus and alternative data to fill any gaps. Understanding that key issues differ from industry to industry is also crucial, says Kwok. “We identify about six to ten key ESG issues where companies in that industry currently generate large environmental or social externalities; these are issues where some companies may be forced to internalise unanticipated costs associated with those externalities in the future.” *Fixed income has historically lagged equities in the ESG field. Find out what the main challenges are for ESG bondholders and how they aim to overcome them here. ©2019 funds global asia

Sponsored Profiles

Sponsored feature: How is DLT changing the global securities services landscape?

Oct 17, 2019

By Jeslyn Tan, global head of product management, securities services, at Deutsche Bank

Sponsored feature: A new base for fund distribution

Oct 16, 2019

To get the most value out of the digitisation of investment fund distribution, a blockchain-based infrastructure is fundamental. By Olivier Portenseigne, Managing Director and Chief Commercial Officer, Fundsquare.

Sponsored profile: Bridging the gap

Mar 11, 2019

Private equity is a core part of the business for Caceis’ Hong Kong office, which looks after clients in China and Europe. David Li, chief executive officer, explains why private equity enjoys strong client demand and how it is being used to fund China’s international infrastructure ambitions.

SPONSORED FEATURE: Market knowledge key to fund distribution in Asia

Jan 11, 2019

The highly fragmented investment markets in the Asia-Pacific region require detailed knowledge of each market’s unique characteristics and framework. By Lou Kiesch, Partner, and Marc Noirhomme, Director, at Deloitte Luxembourg.

Executive Interviews

Executive interview: ‘Bull markets don’t die of old age’

Dec 12, 2019

Having a balanced portfolio in the midst of the longest expansion in history is an investment imperative, Chris Alderson, co-head of global equity and head of international equity at T Rowe Price...

Executive interview: Timing the market

Oct 17, 2019

Amy Cho, Schroders’ Hong Kong chief executive and regional head of intermediary clients, tells Romil Patel about Hongkongers’ love of investing, staying nimble in a volatile market and following...

Roundtables

Singapore roundtable: A horizon to hold long-term assets

Dec 12, 2019

Panellists discuss the geopolitical fractures concerning asset owners, Singapore as a hub for fintech start-ups and why it makes sense to raise capital from a Variable Capital Company (VCC). Chaired by Romil Patel in Singapore.

Roundtable: Priming for Asia’s growth

Oct 17, 2019

Panellists discuss expanding product capability across Asia-Pacific, the opportunities and regulatory challenges around data and the prospects for ETFs in the region. Chaired by Romil Patel in Hong Kong.