How critical is ESG to emerging markets?
In our view, ESG is something that emerging markets investors should always have been looking at: a lot of emerging market countries and credits rank towards the top level of ESG risk. At BlueBay, ESG is now fully integrated into our processes. We have seen a large amount of issuance in the green bond space as well, so it is certainly a growth area.
How closely do you work with the BlueBay ESG team to form ESG views?
All of us have input to the ESG team, but the credit analysts and strategists, and the sovereign strategists, work especially closely with the ESG team to form two views: a fundamental view of the issuer's ESG risk rating; and then our view on the ESG risk score appropriate for the particular investment.
How do those views flow into investment calls?
Provided the results do not ban us from looking at an investment, we then try to marry this ESG view with the valuations in the market. Is the ESG risk already discounted in the price, or not?
That investment call is taken on the desk, but our close interaction with the ESG team helps us to form the fundamental views - and we get regular updates from the ESG team at the industry sector level too, e.g., on what's been happening in the oil and gas space over the last month.
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