Fixed-Income ESG Strategies

Ulf Erlandsson

Chapter 17 in Sustainable Investing:Problems and Solutions, 2024, pp 451-472 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Fixed income is the biggest asset class in global financial markets, spanning capital provision for all types of entities from sovereign to private corporates, and with a direct cost-of-capital effect through primary market capital supply. This article discusses a holistic perspective on applying climate and ESG-type investment preferences on fixed-income portfolios. We discuss how these types of strategies then can be implemented in a portfolio context to generate a well-diversified impact and risk/return profile. Due to the asymmetrical risk–return profile of fixed income, applying a multi-threaded, well-diversified approach is argued to be a fiduciary-aligned approach to managing any fixed-income portfolio.

Keywords: Sustainable Investing; Impact Investing; Corporate Social Responsibility; Materiality; Externalities; Sustainability; ESG; ESG Funds; ESG Factors; ESG Scores; SASB; SDG; DEI; Private Equity; General Partners; Active Ownership; Investment Stewardship; Machine Learning; Natural Language Processing; Large Language Models; Transition Economy; Climate Risk; Net-zero Investing; Divestment; Greenhouse Gas Emissions; Scope 3 Emissions; Modern Portfolio Theory; Venture Investments; Carbon Dioxide Removal; Carbon Credits; Fuel Production; Portfolio Management; Market Sentiment; Factor Investing; Portfolio Optimization; Post-investment Management; Digital Transformation; Fixed Income; Portfolio Performance Measures (search for similar items in EconPapers)
Date: 2024
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