Pickering: Different asset owners have different priorities. Endow- ments and high-net-worth individuals might have a different per- spective from a trustee.


The G is the most important one because trustees are focused on governing their schemes well, and it is natural, therefore, to make sure that the businesses in which we invest are equally well gov- erned. If they are well governed, then the E and the S will be taken care of, so I make no apology for focusing more on the G than the E and the S. Freedman: From a fixed-income risk perspective, governance fail- ures and working conditions failures linked to the social side of ESG can impact a company’s reputation, and ultimately, its licence to operate. If that fails, then the business fails. It is inherent in credit analysis and this is something we need to be more specific about. Companies are becoming more accountable to answer these questions more eloquently and robustly than they have in the past. Nummela: I might be re-engineering governance, but companies understanding climate change is part of governance. CDP num- bers show that there are more than 200 companies, some in the high-risk sectors, that have no idea about transition. So, are they well governed?


If you are managing your risk, you will not necessarily buy the highest yielding bonds, but buy the bonds that you think have the lowest long-term risk and ESG is part of that. Mark Gull, Pension Insurance Corporation


February 2020 portfolio institutional roundtable: ESG and fixed income


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