Reporting is currently patchy and, in my view, easy to


misinterpret. Ian MacRae, JaguarLandRover


We can do exclusion lists, positive impact, best-in-class screening, but one of our principles is to choose companies that might be poor at ESG, but if we engage with them and make them better, that is a success. But reporting is backward looking, so it might penalise the client who is trying to do that. We are at the point where we have integrated ESG into our analy- sis, but as an industry we need to do a better job of defining what it means, how it can be used and evidence the impact we are hav- ing on portfolios. It is evolving quickly. We are trying to be partners and good strate- gic thinkers alongside our clients to make this work across their portfolios.


PI: How easy is it to engage with companies as a bondholder? Cielinski: Surprisingly easy. We are not voting stakeholders in the way that equity holders are, but these companies are frequently accessing debt markets. If they can sell their bond at a quarter of a percentage point lower if they did not have these ESG risks, they start to listen. Aside from that, they know that with the trends that are unfolding they have an obligation to deliver on more than one front.


As a stakeholder on the bonds side, we say we will lend to you at a lower rate if you can do this. They are receptive to hearing that.


PI: How would you describe the quality of ESG reporting? 14 May 2021 portfolio institutional roundtable: Fixed income


Hitchman: It is a changing landscape. It is not just about looking backwards. It is a journey in terms of the reporting trustees receive from their advisers and managers to evidence the actions they are taking and the value they are adding. Fundamentally, if you want to see the importance of ESG look around the world to see what is happening. These are important issues that pose real world risks to all investments, so it is impera- tive that these are looked at. ESG is one of many risks and it is important to judge this as part of the assessment of a company’s credit risk. Martin: Everyone is on a journey. The infrastructure needs to be put in place to provide the reporting needed. There are issues between loans, private equity sponsors, liquidity and what is avail- able, but just because it is hard does not stop you from doing what you can and then engage to improve it over time. This is a journey. I do not expect perfection today, but we have to start somewhere. It might be the easier bits that we start with, but we have to take that forward. It is not a question of a ‘nice to have’. The world has changed and there are a series of increasing demands on trustees to report on these matters. Fixed income investors can play an important role in discussions with companies. In respect of equities, you are generally buying ‘second hand’, you are not providing capital, IPOs aside. For a new issuance or companies which regularly tap the debt market, you


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