Sustainable Investing Report
We aim to be a leading sustainable investment solutions provider
Leadership in sustainable investing is essential to deliver on our clients’ financial objectives while sustainable long-term economic growth is essential to maintain healthy markets.
PIMCO’s ESG (environmental, social, and governance) analyst team outlines the following best practices for issuers of green, social, sustainability or sustainability-linked bonds.
Offering a wide range of potential opportunities for active investors, sustainable bonds are an increasingly important part of global fixed income markets.
As part of PIMCO’s ESG process, we believe that identifying and successfully engaging with companies that are willing to improve their ESG standing is critical for investors.
The recent UN Climate Change Conference helped advance initiatives important to sustainable investing, especially the global energy transition.
The fast-growing market for sustainability-linked bonds offers opportunities, and we believe issuers would benefit by incorporating even more ambitious performance metrics and goals.
PIMCO has developed a four-pillar framework to help investors target long-term objectives to reduce portfolio exposure to greenhouse gases.
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1 The figure includes Third party and Allianz AUM with strategies that include (i) minimum standards that refine the investment opportunity set based on client directed exclusions criteria (“exclusionary” portfolios); (ii) a focus on enhancing the sustainable characteristics of the portfolio in comparison to its investment universe (“enhanced” portfolios) or (iii) a focus on achieving a specific environmental/ social objective in addition to a financial objective (“thematic” portfolios). return to content
2 About 75% of PIMCO’s firm-wide market value of corporate issuers engaged on ESG topics from Jan 1-Dec 31, 2022. Includes all engagements conducted by ESG and credit analysts. Calculated as % by par-adjusted AUM as of 31 December 2022. Corporate issuers are credits covered by PIMCO’s corporate analyst team. return to content
3 Results from PRI's 2021 reporting cycle. Reported as of December 2022. SOURCE: PIMCO, PRI.return to content
PRI Assessment Reports are limited to signatories’ of the Principles for Responsible Investment (PRI), and consider a signatory’s responsible investment implementation across its overall investment process, among other factors. PRI Assessment scores are provided per module or asset class, with no overall organization score given. PIMCO’s scores reflect information and data reported by PIMCO to PRI in the 2021 reporting cycle (as of December 31, 2020). Please note that publication of the 2021 public transparency reports was delayed due to changes in PRI’s reporting and assessment process. PRI’s 2021 scoring methodology has changed to reflect the new Reporting Framework. Scores for the 2021 reporting cycle are not comparable to previous years. Prior to 2021, PRI assessments were awarded scores based on a scale from A+ to E, with A+ being highest score and E being the lowest. PRI Assessments awarded from 2021 onward are based on a scale of 1-5 Stars. 1 Star being the lowest score, 5 Stars being the highest. For 2021 Methodology and an overview of the PRI Reporting Framework, please refer to https://dwtyzx6upklss.cloudfront.net/Uploads/j/l/f/assessmentmethodology2021_302746.pdf. For additional information regarding how PRI assesses signatory reporting, please refer to https://www.unpri.org/reporting-and-assessment/how-investors-are-assessed-on-their-reporting/3066.article.
PIMCO is committed to the integration of Environmental, Social and Governance ("ESG") factors into our broad research process and engaging with issuers on sustainability factors and our climate change investment analysis. At PIMCO, we define ESG integration as the consistent consideration of material ESG factors into our investment research process with the goal of enhancing our clients’ risk-adjusted returns. Relevant factors may include, but are not limited to: climate change risks, resource efficiency, natural capital, human capital management, human rights, regulatory risks, and reputation risk at an issuer. Further information is available in PIMCO’s Sustainable Investment Policy Statement.
With respect to comingled funds with sustainability strategies and guidelines (“funds that follow sustainability strategies and guidelines”), we have built on PIMCO’s over 50-year core investment processes, while actively incorporating sustainability principles. Through these guiding principles—excluding issuers fundamentally misaligned with sustainability factors, evaluating issuers using proprietary and independent ESG scoring (in addition to externally sourced and internally developed criteria), and engaging with issuers on ESG-related topics with the objective of improving investment outcomes - funds that follow sustainability strategies and guidelines seek to deliver attractive returns while also pursing to provide a vehicle through which investors can meet their sustainability preferences. Please see each fund that follows sustainability strategies and guidelines prospectus for more detailed information related to its investment objectives, investment strategies and approach to ESG.
ESG investing is qualitative and subjective by nature, and there is no guarantee that the factors utilized by PIMCO or any judgment exercised by PIMCO will reflect the opinions of any particular investor, and the factors utilized by PIMCO may differ from the factors that any particular investor considers relevant in evaluating an issuer’s ESG practices. In evaluating an issuer, PIMCO is dependent upon information and data obtained through voluntary or third-party reporting that may be incomplete, inaccurate or unavailable, or present conflicting information and data with respect to an issuer, which in each case could cause PIMCO to incorrectly assess an issuer’s business practices with respect to its ESG practices. Socially responsible norms differ by region, and an issuer’s ESG practices or PIMCO’s assessment of an issuer’s ESG practices may change over time. There is no standardized industry definition or certification for certain ESG categories, for example “green bonds”; as such, the inclusion of securities in these statistics involves PIMCO’s subjectivity and discretion. There is no assurance that the ESG investing strategy or techniques employed will be successful. Past performance is not a guarantee or reliable indicator of future results.