2019 Breckinridge Sustainability Report - Page 24

We believe in the investment case for sustainability,
prompting us to be a first mover in integrating ESG.
ESG Integration
Bond Issuer Engagement
ESG Integration
Our ESG analysis for bond issuers consists of both quantitative
and qualitative assessments that we deem to be material to
the credit quality of the issuer. We evaluate ESG factors across
corporate and municipal issuers. The ESG factors assessed
largely differ by sector, based on the materiality of the issues
to each sector.
For municipal issuers, examples of material metrics include
the housing affordability index, economic mobility rate and
drought vulnerability. A review of sustainability and climate
resiliency planning materials published by the issuer provides
qualitative ESG information.
For corporate bond issuers, examples of material metrics
include, but are not limited to, health and safety performance,
greenhouse gas emissions and water intensity. Our corporate
analysts look to an array of sources, such as sustainability
research firms and widely known data providers, to obtain
available metrics. Qualitative ESG information is obtained
from corporate sustainability reports, engagement calls and
annual reports.
Bond Issuer Engagement
To bolster our ESG research, Breckinridge also engages with
bond issuers where appropriate. We believe that engagement
leverages our voice as a stakeholder to bring greater focus on
management’s stewardship of ESG issues.
Bondholders play a key role in the capital structure but,
unlike shareholders, we have no formal venue such as
proxy voting to be heard systematically. To address this, we
direct our engagement effort through private dialogues with
Sustainable Strategies
ESG Collaborations
management. During these discussions, we gain a better
understanding of the profiles of our issuers and the material
issues they face. At the same time, we proactively encourage
ESG management and reporting.
Sustainable Strategies
In addition to integrating ESG and engaging with our bond
issuers, we offer government credit and tax-efficient
sustainable strategies that selectively invest in issuers with
above-average ESG profiles and bonds that fund essential
environmental, social or economic development projects.
Managed in a separate account, these strategies can also
accommodate values-aligned customizations, such as
environmental or faith-based based themes, or negative
screens through security level or sector-based restrictions.
ESG Collaborations
Breckinridge is a signatory to the United Nations-backed
Principles for Responsible Investment (PRI). As part of
our commitment to the PRI, we aim to create a broader
dialogue about sustainability, ESG integration and long-term
value creation within the investor community. As such, we
continue to support and partner with a wide variety of leading
sustainable-investment organizations.
In 2018, we collaborated with several organizations, including
CECP’s Strategic Investor Initiative (SII), the Sustainability
Accounting Standards Board, the Social Progress Imperative
and MIT Sloan’s Sustainable Business Lab. In addition, we
contributed to several industry reports, such as publications
from the World Bank and Japan’s Government Pension
Investment Fund, the Union of Concerned Scientists, CECP SII,
and the CFA Institute and the PRI.


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