As active asset managers with a focus on long-term value creation and responsible stewardship, effective engagement is a critical part of our investment process and fiduciary obligations.
07.09.2023 | 06:01 Uhr
Morgan Stanley Investment Management (MSIM) Fixed Income has developed a targeted and thematic engagement programme on environmental, social and governance (ESG) issues. Our approach is fully integrated into our research and investment processes to identify opportunities for improved risk management and alpha generation through constructive dialogues with issuers, while encouraging them to pursue positive sustainability outcomes.
The Growing Imperative for Fixed Income Engagement
Fixed income investors have an important role to play in building a constructive dialogue with issuers and supporting them in pursuing positive sustainability outcomes while enhancing ESG disclosure and price discovery of the proper cost of capital when accounting for ESG risks. While engagement and stewardship have historically been an equity investor remit, we believe fixed income investors are uniquely positioned to have a positive influence on issuers for a number of reasons:
MSIM's Rationale for Fixed Income Engagement
Our Fixed Income engagement programme aims to achieve three main objectives:
Insights from the engagement process can therefore result in changes to our Credit Analysts' assessment of the issuer. This may in turn lead to a decision to participate in a new issuance, increase or reduce our existing holdings in outstanding bonds, or "watch-list" the issuer for our Sustainable Funds until more progress is made on the specific E, S or G issue of concern.
Finally, we strive to provide the same level of transparency that we expect of issuers. We therefore track and report our engagements on a quarterly basis, including their outcomes — i.e. whether they affected our investment strategy through the Analyst's recommendations or the Portfolio Manager's investment decision.