Fixed income is an ideal asset class to drive meaningful ESG change.
That's because in terms of sheer size, it is larger than the equity market. And there is a strong need for issuers to engage with buyers as they have to fundraise.
One company that PIMCO has engaged with is a British mutual financial institution. The bulk of the indirect GHG emissions created across their value chain (known as scope 3 emissions) relates largely to their mortgage portfolio.
PIMCO engaged with management to help shape their new sustainability KPIs, specifically on setting targets on net-zero portfolio emissions and improving the Energy Performance Certificates ratings (EPCs) for the assets secured by their mortgage lending.
In 2021, the institution pledged to go net-zero by 2050, joining the Net-Zero Banking Alliance (NZBA) and the Glasgow Financial Alliance for Net Zero (GFANZ). They also set a target for their mortgage portfolio to reach 50% of C-rated or above by 2030 in line with our recommendations.
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