In Depth

PIMCO ESG Investing Report – Bonds for Change

We believe bond markets are the foundation of a sustainable recovery.

Executive Summary

  • At PIMCO, we seek to foster growth and change in ESG fixed income investing. This includes driving market innovation, focusing on industry standards, engaging with issuers, and partnering with clients.
  • Issuer engagement is a cornerstone of PIMCO’s ESG approach. In 2020, PIMCO’s credit analysts engaged with more than 1,500 companies around the world on environmental, social, and governance (ESG) topics to drive positive change in capital markets. Read the full report for case studies.
  • As a partner in a globally coordinated sustainability effort, PIMCO contributes to key industry groups and multinational organizations, and is actively involved in innovating and growing the market for sustainable bonds.
  • The COVID-19 pandemic has helped focus attention on issues at the core of ESG investing: inclusive economies, healthy communities, safe and equitable workplaces, resilient supply chains, and alternative and cleaner energy. At PIMCO, these and other factors have long been embedded in our research, engagement, and investment decisions.
  • PIMCO recognizes the profound impact that climate change will likely have on the global economy, financial markets, and issuers. We have developed tools to evaluate material climate risks from an investment lens, and we offer an opportunity for investors to target global climate action with their bond allocations.
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Past performance is not a guarantee or a reliable indicator of future results.

A word about risk: Investing in the bond market is subject to risks, including market, interest rate, issuer, credit, inflation risk, and liquidity risk. The value of most bonds and bond strategies are impacted by changes in interest rates. Bonds and bond strategies with longer durations tend to be more sensitive and volatile than those with shorter durations; bond prices generally fall as interest rates rise, and low interest rate environments increase this risk. Reductions in bond counterparty capacity may contribute to decreased market liquidity and increased price volatility. Bond investments may be worth more or less than the original cost when redeemed. Investing in foreign denominated and/or domiciled securities may involve heightened risk due to currency fluctuations, and economic and political risks, which may be enhanced in emerging markets. Mortgage and asset-backed securities may be sensitive to changes in interest rates, subject to early repayment risk, and their value may fluctuate in response to the market’s perception of issuer creditworthiness; while generally supported by some form of government or private guarantee there is no assurance that private guarantors will meet their obligations. High-yield, lower-rated, securities involve greater risk than higher-rated securities; portfolios that invest in them may be subject to greater levels of credit and liquidity risk than portfolios that do not. Equities may decline in value due to both real and perceived general market, economic, and industry conditions. Derivatives may involve certain costs and risks such as liquidity, interest rate, market, credit, management and the risk that a position could not be closed when most advantageous. Investing in derivatives could lose more than the amount invested.

Socially responsible investing is qualitative and subjective by nature, and there is no guarantee that the criteria utilized, or judgment exercised, by PIMCO will reflect the beliefs or values of any one particular investor. Information regarding responsible practices is obtained through voluntary or third-party reporting, which may not be accurate or complete, and PIMCO is dependent on such information to evaluate a company’s commitment to, or implementation of, responsible practices. Socially responsible norms differ by region. There is no assurance that the socially responsible investing strategy and techniques employed will be successful. Past performance is not a guarantee or reliable indicator of future results.

Forecasts, estimates and certain information contained herein are based upon proprietary research and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. There is no guarantee that results will be achieved.

There is no guarantee that these investment strategies will work under all market conditions or are appropriate for all investors and each investor should evaluate their ability to invest long-term, especially during periods of downturn in the market

PIMCO as a general matter provides services to qualified institutions, financial intermediaries and institutional investors. Individual investors should contact their own financial professional to determine the most appropriate investment options for their financial situation. This material contains the opinions of the managers and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. PIMCO is a trademark of Allianz Asset Management of America L.P. in the United States and throughout the world. ©2021, PIMCO.