2019 Breckinridge Sustainability Report - Page 23



PRIORITIZING ESG INVESTING
At Breckinridge, our interest in ESG factors is about
extraordinary thoroughness and effort in evaluating
an investment. It is also about our time horizon.
Our investment approach is rooted in the idea that
understanding the long-term risk-return profile of an
investment requires an expanded, more forward-looking
type of analysis. These are key reasons why we were a first
mover in integrating ESG in fixed income.
Although the debate over the relevance of ESG lingers,
our fundamental belief is that ESG-related challenges will
continue to manifest themselves in the coming years. Some
challenges will be environmental, related to constraints on
resources. Other challenges will be social, in which bond
issuers may increasingly be held accountable to broader
stakeholder groups. Still others will be governance-related,
such as the importance of a diverse, independent board.
We believe the market can at times underprice certain
longer-term and idiosyncratic risks, such as those posed by
material ESG issues. As an investment grade fixed income
manager with an emphasis on capital preservation and risk
mitigation, we think it is our obligation to gain the most
comprehensive view of an investment. By broadening the
scope of traditional analysis and examining ESG, we aim
to identify risks before they are reflected in the broader
market and to better prepare our clients for the future.
Without an industry standard to follow, we were thoughtful
and innovative in developing our approach to ESG, which
we have continued to refine over the years. Integrated into
our standard investment process and led by our research
team, our approach considers quantitative and qualitative
factors based on proprietary ESG frameworks and issuer
engagement. In addition to integrating ESG, we have also
developed sustainable investment solutions to support
clients in their responsible-investing goals.
We believe in continuous improvement and we never stop
challenging ourselves. As such, we are deeply committed
to the ongoing development of new tools and capabilities
to further enhance our ESG insights. Equally, we are
committed to advancing ESG more broadly by engaging
and collaborating with experts, issuers, clients and peers.
Through these continuing commitments, we aim to lead by
example in this highly dynamic space.
20

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