Eaton Vance Account Plan SWOT

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ESG - Trends

Some broad trends in the US ESG (environmental, social, and governance) category are increased executive accountability, ESG metrics in incentive plan, and gender diversity.

TREND #1: INCREASED EXECUTIVE ACCOUNTABILITY

HOW IT IS HAPPENING:
ITS EFFECT IN THE INDUSTRY:
  • Regular reviews, including diversity, gender, race, ethnicity, and cultural background, help companies to add value and serve their clients better.
  • According to the 2018 Reputation Dividend report, a company's reputation contributes to up to 38% of its market capitalization.
  • Increased executives accountability, as seen by investors joining the call to manage workplace risks, will improve employee engagement and retention, thus boosting productivity.
  • After the #metoo initiative began in 2017, 53% of businesses reported that their sexual harassment cases went up while the cases decreased in 4% of businesses.
COMPANIES AT THE FOREFRONT OF THE TREND:
  • California Public Employees’ Retirement System (CalPERS) votes against any director sitting on a board for over 12 years in order “to oust those executives who have behaved problematically.”
  • Engage PEO, Mercer-Mettl, and Thrive! Resumes are some other companies working to eliminate harassment from the workplace by creating a zero-tolerance culture, regular training, and awareness programs.

TREND #2: ESG METRIC IN INCENTIVE PLAN

HOW IT IS HAPPENING:

  • ESG metrics in incentive plans for executive include diversity and inclusion, employee engagement, and environmental.
  • According to the respondents of the ESG Metrics Spot Survey, 30% reported that they are either currently using ESG metrics in their incentive plans, and 21% are considering using them in the future.
  • According to the survey, most common for ESG metrics is to apply to all incentive plan participants, rather than just senior executives.
  • Companies that tie ESG metric to their incentive plans report their ESG goals and the progress they've made towards achieving those goals, to all stakeholders via the annual CEO letter, annual reports, among other avenues.

  • ITS EFFECT IN THE INDUSTRY:
    • ESG metrics usage saw the highest prevalence among respondents in the Mining & Metals and Energy sectors.
    • Employee Engagement/Culture is the most prevalent metric for 76% of respondents in all other sectors, followed by Diversity & Inclusion for 35% of respondents in all other sectors.
    • From the survey, 96% of the respondents in the Mining & Metals and Energy sectors are far more likely to use an Environmental metric i.e., use ESG metrics in their incentive plans.
    COMPANIES AT THE FOREFRONT OF THE TREND:

    TREND #3: GENDER DIVERSITY

    HOW IT IS HAPPENING:
    • During the board’s evaluation for their quality and competencies, investors consider the directors' age, tenure, and diversity, including gender, race, and ethnicity.
    • Though the age, tenure, or diversity quotas are not a legal requirement in the US, investors are paying close attention to them when it comes to board composition.
    ITS EFFECT IN THE INDUSTRY:
    • In 2019, new policies are expected to be implemented at two of the most prominent proxy advisory services, Institutional Shareholders Services (ISS) and Glass Lewis (GL), "allowing recommendations against boards that lack diversity."
    • The California legislation ruled out that public companies that have principal executive offices located in California, irrespective of their incorporated location, should include a “representative number” of women on their boards of directors.
    COMPANIES AT THE FOREFRONT OF THE TREND:
    • Companies like Vanguard and AXA partnered with the Thirty Percent Coalition to "promote gender diversity on corporate boards."
    • According to the Wall Street Journal, 17% of S&P 500 boards were female in 2012, and in 2019, women hold 27% of all S&P 500 board seats.
    • According to an ISS publication, women filled 45% of new board positions among the Russell 3000, a 34% increase from 2018.

    RESEARCH STRATEGY:

    To identify three to five broad trends in the US ESG (environmental, social and governance) category we scoured through industry reports and media publications such as S&P Global, Forbes, CNBC, Inc, ISS Governance, HBR, Business, among others. The idea was to check these sources for the latest trends or future-facing trends that are currently applied throughout the market. These sources were used as prima facie as these channels are most likely to highlight the trends in the industry. We have focused on broad trends related to workplace diversity, gender pay gap, among others. Trends have been identified as trends based on their repetition as "trends" in two or more sources.

    Since mostly all trend reports and articles focused on climate change and investments, we have also used surveys/case studies in the field and corroborated them with similar studies/articles to show them as trends as they were mentioned in two or more sources highlighting its importance and/or its impact in the industry. Also, as most trends are focused on the global economy rather than only the U.S., we have used global trends which either highlight the U.S. market or can be seen implemented through U.S. based companies.
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    ESG - Insights

    Three insights describing how the buzz around climate change in the media and public has affected the ESG conversation among businesses and investors include the shift towards a long-term orientation, the growth of investment portfolios that consider climate change, the validation and adoption of ESG rankings and ratings, and the creation of ESG frameworks.

    Shift Towards a Long-Term Orientation

    • A KPMG report asserts that the real significance of increased public and business focus on climate change and other ESG issues is that it encourages businesses to shift toward a longer-term orientation.
    • A shift towards a longer-term orientation would affect every aspect of the business, not just those aspects likely to be impacted by climate change.
    • Businesses with a long-term orientation purchase more efficient machinery and pay more for employee training.
    • Similarly, the growing focus on climate change has encouraged the development of new, long-term metrics that give businesses new insights on how to create value and strategy.

    Growth of Portfolios that Consider Climate Change

    • The rising public awareness about climate change has led investors to consider ESG when investing because of customer preference, regulatory measures, and the risk of legal action.
    • Several key investors have institutionalized ESG investing. BlackRock, for example, announced that it would require all of its fund managers to consider ESG factors when they invest.
    • Similarly, when Vanguard's shareholders demanded more climate disclosures, Vanguard responded by announcing that it planned to develop policy mitigating both climate risk and encouraging gender diversity. This action demonstrates the link between climate change awareness and other ESG issues.
    • In a more direct sense, climate change will seriously impact industries like real estate because of rising sea levels so investors must build portfolios that consider climate change in order to be profitable.

    Validation of and Use of ESG Ratings

    • The buzz around climate change has led to the institutionalization of ESG through ESG ranking systems.
    • Rating companies like FTSE Russell first developed ratings to quantify businesses' climate change mitigation but began to include the other issues included in ESG as it was popularized.
    • MSCI ESG Research, Bloomberg, and Thomson Reuters have all developed ESG ratings that are now used by thousands of companies.
    • Now, most ESG rating companies weight environmental impact most heavily, then social impact, and lastly governance.
    • In the consumer staples, financial, and health care industries, ESG has become especially popular, and so companies and these industries use ESG rating to demonstrate their compliance.


    Research Strategy

    To identify the three trends listed, our research team employed a three-part strategy. First, we conducted preliminary research on how the buzz around climate change in the media and public affected the ESG conversation among businesses and investor, and created a list of potential insights based on this overview. Next, we narrowed down the list by evaluating which insights most clearly reflected the impact of climate change awareness, which insights reflected the impact of this awareness on issues besides just climate change, and which insights were most substantiated by various sources. Based on these criteria, we identified the three insights described above and conducted a final round of research to provide further details for each claim.


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    Blackrock - ESG History

    In February 2015, BlackRock launched a platform for investors with social and environmental objectives called BlackRock Impact. In 2018, BlackRock’s sustainable funds accounted for 2.1% of total investments of the company, whereas in 2019, the company's sustainable funds made up 2.5% of the total investments.

    HISTORY OF BLACKROCK'S ESG OFFERINGS

    ESG/SRI OFFERINGS BREAKDOWN

    • BlackRock Impact, an investors' platform with social and environmental objectives, was formed in February 2015 by BlackRock.

    Equity funds

    Fixed income funds

    Multi-asset funds

    Index investment

    ESG /SRI OFFERINGS PROGRESS-IMPROVED

    • In 2018, BlackRock’s sustainable funds accounted for 2.1% of total investments of the company, while in 2019, they increased to account for 2.5% of the total investments.
    • In 2018, the company had 347 sustainable ETF funds, and by April 2019, they had gone up to 349.
    • As of 2019, BlackRock’s ESG ETF account for $25 billion and according to projections they may hit $400 billion by 2028 with a 3% increase in total assets.

    COMPETITIVE WAYS OF BLACKROCK'S ESG/SRI PRACTICES

    RESEARCH STRATEGY:

    Initially, we commenced our research on the company website. We thoroughly scanned through all webpages, whitepapers, company blogs, and all publicly available resources to garner insights on the history of Blackrock's ESG (environmental, social and governance) and SRI (socially responsible investing) offerings and initiatives but we could not locate any pre-compiled reports or articles on the history of Blackrock's ESG and SRI offerings as most of the reports are about general insights on the history of ESG integration. So, we captured insights from multiple company reports on the history of Blackrock's ESG offerings.

    Next, we switched our focus to search for the progress of BlackRock's ESG/SRI offerings/initiatives and BlackRock's competitive ESG/SRI best practices in case studies and media publications such as Ethical Corporation, CSR Hub, Green Biz, Board Member, IR Magazine, Business Wire, CorpGov, Harvard.EDU Think Advisor, and many others as there was no relevant data in company website and we did locate some valuable insights on the progress of BlackRock's ESG/SRI offerings/initiatives and BlackRock's competitive ESG/SRI best practices. It is to be noted that improvement of ESG/SRI offerings/initiatives is mentioned in terms of the overall increase in the share of sustainable funds (ESG initiatives) over non-sustainable funds of BlackRock, as stats with respect to improvement in each initiative mentioned are not published by the company or any third-party source.
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    Blackrock - ESG Reputation

    BlackRock’s ESG Ranking (%) was computed as 80% when compared with 17,467 companies. BlackRock has made quite a modest increase in the number of sustainable investment funds in 2018 and also earned a perfect score on the Corporate Equality Index (2013-2018) conducted under the Human Rights Campaign. Brian Deese and Meaghan Muldoon are famous executives at BlackRock. They are representing the needs/interest of ESG.

    BlackRock’s ESG Integration

    • All investment teams at BlackRock are responsible for implementing ESG approaches in line with their investment mandate and are required to have a formal ESG integration statement to underpin their respective approach.
    • BlackRock’s portfolio managers can bring useful ESG information into their investment processes, emphasizing this information as they would any other financial input, using necessary data and tools.

    BlackRock’s ESG Reputation

    • BlackRock introduced a core ESG ETF portfolio, new ESG funds and more extensive disclosures on ESG metrics in 2018, which was stated by ThinkAdvisor as a big bet on ESG Investments.
    • As per study conducted by research analysts Ariel C. Pinchot, Jack McClamrock and Giulia Christianson from World Resources Institute, with investments in emerging markets such as sustainable debt funds, and an equity impact fund, new fixed-income ETF, and a transition-ready strategy that invests in companies positioned to facilitate the global transition to a low-carbon economy, BlackRock made a modest increase in the number of sustainable investment funds in 2018.
    • BlackRock’s engagement with over 200 companies on the climate risk issue has been considered to be encouraging "given the potential for shareholder engagement to advance climate action."
    • BlackRock also pushed a firm-wide effort to give clients the best service when it comes to the investment process by giving clients access to a better and more improved version of the ESG data analysis.
    • Additionally, BlackRock has also published a report that offered insights when it comes to controlling and managing climate-related investment risks. This was considered to be a problem for investors who tend to under price climate change.
    • However, BlackRock is on the downside in terms of direct engagement due to its absence from the Climate Action 100+ initiative. The initiative is filled by “a network of over 340 investors with $32 trillion in assets under management.”
    • Additionally, some “sustainable” investment funds contain shares of fossil fuel companies, fossil-fuel company shares in ESG, and low-carbon funds, and they are considered to be not an anomaly in the industry.
    • BlackRock was the first asset manager to publish the environmental, social, and governance (ESG) ratings of companies across its entire iShares investment portfolio.
    • The six ESG screened funds launched in October 2018, have attracted eight times the traffic on BlackRock’s iShares ETF platform as its conventional ETFs.
    • BlackRock’s ESG Ranking (%) is computed as 80% as compared with 17,467 companies. ESG Ranking by CSRHub provides perspective by rank ordering a company’s ratings against all other ratings.

    Awards and Mentions

    Famous executives at BlackRock representing the interest of ESG

    Brian Deese

    • Designation: Global Head of Sustainable Investing at BlackRock.
    • Role: Under Deese’s leadership, the sustainable investing team of BlackRock focuses on finding the main drivers of long-term return investments which are associated with various environmental, social, and governance issues. Then the team integrates them throughout Blackrock’s investment processes; thereby, creating solutions for the company’s clients to achieve sustainable investment return.

    Meaghan Muldoon

    Research Strategy

    The research team leveraged a compilation of information available on the company website, industry databases, and leading publications to curate Blackrock’s ESG (environmental, social and governance) and SRI (socially responsible investing) reputation.

    We commenced our research on the company website. The team thoroughly scanned through all webpages, white papers, company blogs, and all publicly available resources to check for any metrics that can describe company’s reputation in the ESG/SRI space and if the company has shared any comments by experts. The awards and mentions received by the company in the ESG/SRI space are how the experts and the general public perceives the company and talks about its reputation. We also used the company website to learn more about the famous executives at BlackRock representing the needs/interest of ESG and their role at BlackRock.

    The team then switched our focus to mentions of BlackRock and ESG Integration in case studies and media publications found in Ethicalcorp.com, CSRhub.com, Greenbiz.com, Boardmember.com, IRmagazine.com, BusinessWire.com, corpgov.law.harvard.edu, Thinkadvisor.com, and many others. While articles and reports threw light on the company’s message in the ESG/SRI space, we filtered the relevant information which indicated what the media, experts, and the general public think about their ESG/SRI practices at BlackRock.
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    Blackrock - ESG Advertising

    BlackRock defines sustainable investing as a combination of traditional approaches using ESG insights to mitigate risk and drive long-term return, and they provide their clients sustainable investment solutions from human capital management to climate change. They use strategies such as content marketing that educates consumers and prompts SRI, use of real-time analytics to target key demographics, and even having annual financial literacy rallies. The company primarily focuses on providing products in line with SRI as well as the short and long-term financial stability and financial literacy of people around the world. Information regarding the campaigns are included below, however, example of advertising for the Inspired to Invest campaign is not included as it was part of the Asia launch and not available in English.

    BLACKROCK

    #INSPIREDTOINVEST

    • BlackRock leveraged Yahoo's audience data and analysis looking at each stage of the customer journey to develop insights to create awareness and create relevancy to their target audiences. They used a real-time data analytics dashboard to analyze the effectiveness of the company's content across media channels.
    • End-investors will be educated about the new hub via native and display advertisements and Yahoo! HK FB page and was amplified through social media and drove traffic to the BlackRock website.
    • Another strategy was the creation of inspirations to invest by engaging consumers with lifestyle content and an interactive game with investment concepts to prompt investing. Given that 60% of the traffic to the hub was by mobile access, they company created a mobile-first experience for the Asia campaign launch. Starting with small amounts of content, "short infographic videos, polling and online quiz games", and they also used weekly articles to introduce consumers to concepts and tools like the BlackRock plan.
    • The objectives of the campaigns were to provide investors approachable content to inspire investing, to foster investment for those between the ages of 25 and 54, and to boost the company's image as one that always prioritizes investor interests.
    RESULTS
    • The INSPIREDTOINVEST content hub total page views reached over 172K, with time spent on the hub averaging more than 4 minutes.
    • The campaign successfully reached and exceeded the target audience demographics and native AD CTR reached over 2% outperformed industry benchmark.

    #INVESTORPULSE

    • In February 2019, BlackRock launched a new website in addition to their global #InvestorPulse campaign as part of their larger communication strategy and demonstrated the importance of using quantitative and qualitative insights can turn into action. The campaign landed features in CBS, CNBC, Business Insider, Market Watch, and Plan Adviser.
    • BlackRock found that investing has a positive impact on everyone's life regardless of age, gender and income, and the campaign to the public through their new website and media spotlights. The messaging of planning for retirement lends to the company's commitment to enhance the current well-being of the population and the future human capital and social responsible investing.
    • BlackRock's President, Rob Kapito, delivered an announcement on CBS Good Morning to launch the campaign. The message is that focusing on retirement planning can alleviate stress and improve overall well being today.
    • BlackRock releases the "World’s Largest Study on the Relationship Between Wealth and Well-Being" every year, and note that this edition of the Investor Pulse was conducted during a time of unique political, cultural, and social upheaval.

    GIRLBOSS X BLACK ROCK

    • Girlboss has 151,051 people that like their FB page and 154,375 followers. On Instagram they have 1.3m followers.
    • BlackRock collaborates with Girlboss to offer a 12-week e-course called Money Moves, a 30-day social media initiative on Instagram for social lessons in meeting money goals.
    • The company along with Girlboss held the second annual Girlboss Rally which was a massive two-day event that held panels such as "The Psychology of Saving—And Spending" to address the lack of discussion in society about financial well-being. Events such as these are part of the company ESG initiative to make society better.
    • Girlboss has 1,334,872 followers on Instagram, 75,264 followers on Twitter. On YouTube, they have 4,380 subscribers and 553,121 video views. This shows how BlackRock is expanding on its initiatives to provide public good and educate people worldwide about financial literacy and push their ESG objectives.

    OTHER PR COVERAGE

    • BlackRock has been highlighted by some to have major investments that are contributing to the fires in the Amazon which has led to the creation of petitions and even a website that calls the company to be the biggest driver of climate chaos.
    • In the last week there was a protest of over 40,000 youth just days after a major New York article explored the company's immediate and substantial impact on the climate emergency.
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    Pimco - ESG Advertising

    Some notable ESG (environmental, social and governance) and SRI (socially responsible investing) advertising from PIMCO within the last year include "Keeping Score with ESG," "Our Dedicated ESG Strategies at Work," and "Women In Investing." Complete details are provided below.

    AD#1: KEEPING SCORE WITH ESG

    • PIMCO's "Keeping Score with ESG" advertisement focuses on its commitment to pushing ESG investment and moving it forward by using traditional credit scores and its own ESG score, which is unique to PIMCO's ESG-dedicated strategies.
    • To advertise its ESG/SRI efforts, the company used an owned media strategy that focused video ads from its video library and YouTube page.
    • Examples of ESG/SRI advertising tactics are linked below:
      • Owned Media Strategy — "Keeping Score with ESG" (YouTube)
      • Owned Media Strategy — "Keeping Score with ESG" (Video Library)

    AD#2: OUR DEDICATED ESG STRATEGIES AT WORK

    • PIMCO's "Our Dedicated ESG Strategies at Work" advertisement has a message focused on persuading investors towards positive change and impact through the use of "three building blocks"—exclude, evaluate, engage—together with its proven investment process in investor portfolios.
    • This advertisement effort used an owned media strategy that focused video ads from its video library and YouTube page.
    • PIMCO also used an earned media strategy wherein they were given publicity by a third party, such as Principles for Responsible Investment (PRI), through publishing a case study of PIMCO's on the PRI website, and also including it on the report titled "Shifting Perceptions: ESG, Credit Risk and Ratings: Part 3 — From Disconnects to Action Areas."
    • The company also used an integrated owned media and earned media strategy by publishing the materials by PRI to its own blog titled "ESG, Credit Risk and Ratings: A Case Study," which provides information about its ESG strategies.
    • Another earned media strategy was used when Barron's published an article about PIMCO's commitment to ESG and how the company is trying to change the world through it.
    • Examples of ESG/SRI advertising tactics:
      • Owned Media Strategy — "Our Dedicated ESG Strategies at Work" (YouTube)
      • Owned Media Strategy — "Our Dedicated ESG Strategies at Work" (Video Library)

    AD#3: WOMEN IN INVESTING

    • PIMCO's inclusion, diversity, and culture efforts complement its ESG initiatives.
    • One of the focus points of PIMCO, which is aligned with the UN's 17 SDG (sustainable development goals) is gender equality, which the company believes is necessary for human development and sustainable economic growth worldwide.
    • PIMCO's Women In Investing initiative provides a top-line message of advocating for gender equality and providing clients with information of how to best partner with women investors, "who are a driving force of global wealth but are currently underserved by the industry."
    • Some strategies used for this advertising effort are owned media, earned media, and integrated owned media/earned media strategies, through the use of its company website, social media pages (e.g., LinkedIn, Twitter and YouTube) and article mentions given by third party industry websites and publications.
    • Some examples of ESG/SRI advertising tactics:
      • Owned Media Strategy — "PIMCO Finds Women's Approach to Investing Still Underappreciated"
      • Owned Media Strategy — "How are Women Redefining Performance?"
      • Owned Media Strategy — " Investing in Women, Advocating for Gender Equality"
      • Owned Media Strategy — " Delving into the Disconnect Between Women and Retirement"
      • Integrated Owned Media and Earned Media Strategy — PIMCO promotion (Twitter)
      • Earned Media Strategy — " PIMCO and TXWSW Recognize the Value of Mentorship"

    CHANNELS USED TO ADVERTISE ESG/SRI

    • PIMCO's YouTube page currently has 3.35K subscribers and 181,586 views.
    • PIMCO's Twitter account currently has 246.1K followers and 8,644 tweets.
    • PIMCO's LinkedIn page currently has 130,708 followers.
    • PIMCO also uses the company blog and insights page to advertise its ESG/SRI practices.

    PR COVERAGE RELATED TO ESG/SRI

    • PIMCO was mentioned in a Financial Times article, published on August 10, 2019, titled "ESG Investing Sparks Race in Tech and Hiring at Asset Managers," where information about the company's investment in technology and tools, such as the proprietary milestone system called Comet, measures its issuers' progress against specific ESG objectives.
    • PIMCO was the topic of the Barron's article, published on June 21, 2019, titled "How Pimco Is Trying to Change The World," where information about its ESG efforts and how the company is using it to try to change the world, such as building its own ESG database and scoring model.
    • PIMCO was mentioned in the NordSIP press release, published on February 27, 2019, titled "PIMCO ESG Head Retires (Investment Week)," where it provides information about the retirement of Mike Amey, PIMCO's head of ESG strategies. PIMCO's managing director and portfolio manager, Lorenzo Pagani, will be the one who will take over the UK portfolio.

    ESG/SRI MAJOR EVENTS SPONSORED

    • PIMCO was one of the partners and the event sponsor of the SDG Investment Forum — Brazil, held on March 20, 2019, in Sao Paulo, Brazil. The event was led by the United Nations Global Compact, the United Nations Environment Programme Finance Initiative (UNEP FI), and the Principles for Responsible Investment (PRI).
    • PIMCO is one of the Gold Sponsors of the Grace Hopper Celebration of Women in Computing 2019 that will be held in October 2019, at the Orange County Convention Center in Orlando, Florida. The event is produced by AnitaB.org and is the "world's largest gathering of women technologists."
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    Pimco - ESG Reputation

    According to IPE’s Top 400 Asset Manager's Survey, PIMCO has been considered as the most dedicated ESG and the most responsible investment analyst based on the highest number of corporate governance specialists and responsible investment specialists. MS. Olivia A. Albrecht and Mr. Samuel Mary are the famous executives at PIMCO representing the needs/interest of ESG.

    PIMCO- ESG REPUTATION

    PIMCO- ESG REPUTATION IN MEDIA NEWS AND ARTICLES

    • PIMCO has a very positive reputation with the kind of articles being covered on it by media. The Financial News Article stated that Pimco has made a strong stride into sustainable investing and has become one of the largest fund houses to make such a move. Pimco has become one of the first with regard to investing long term sustainability as the key to success.
    • Similarly, in another other press release published by Allianz, a parent organization of PIMCO, mentioned that the company had applied ESG solutions across the framework. The parent company has an opinion that PIMCO works on three key elements: exclusion, evaluation, and engagement.
    • The company’s investor believes that PIMCO has offered fixed income solutions to its investors seeking attractive returns. The investor feels a positive social impact with the launch of PIMCO GIS Global Bond ESG Fund in EMEA.
    • In another media article published by Insurance Asset Risk, they had a positive view on PIMCO’s strategy specific to climate risk because the company has developed climate risk strategy specific to fixed income that builds tools to monitor the portfolios’ alignment with the UN Sustainable Development Goals (SDGs) and the Paris Agreement.
    • The article also mentions that the company follows an innovative approach in its ESG strategy. The company has developed an innovative framework to expand the ESG capabilities in US municipal bonds and mortgage-backed securities. With this implementation, the participation of issuers have increased, and the company believes that the corporate credit issuers had increased by more than 22% along with the engagement issuer response rate to 81% from 69% in 2017.

    PIMCO- ESG REPUTATION THROUGH EXPERT VIEWS

    • PIMCO has a positive reputation with expert opinions. As per Leslie P. Norton, a mutual funds expert, mentioned that Pimco had built its ESG database with the scoring model, which includes data from third-party providers like MSCI, Bloomberg, and Sustainalytic. Mr. Norton believes that the company gives a detailed analysis after thorough ESG assessment.
    • Mr. Norton mentioned that Pimco works on statistical and analytical views. The company makes an effort to hire and work with “quantitative and data analysts dedicated to ESG who focus on risks that are material to a company’s performance.” Mr. Norton says that PIMCO has long term sustainable development goals, including 232 specific indicators so that an investor can track progress.
    • Another financial expert, Joe McGrath, mentioned in one of the articles that Pimco has been recognized as the company responsible for the socially responsible fund.
    • According to IPE’s Top 400 Asset Manager's Survey, PIMCO has been considered as the most dedicated ESG and the most responsible investment analyst on the basis of the highest number of corporate governance specialists and responsible investment specialists.

    PIMCO- ESG REPUTATION IN GOVERNMENT REPORTS

    • A government report states that PIMCO has a fair and transparent investment process. The Sustainability Accounting and Standard Board, which published SASB Integration Case Study on PIMCO mentioned that ESG analysis that is being undertaken by PIMCO covers all investment process. This ensures that all portfolios benefit from a detailed review of significant non-financial factors that have the potential to impact long-term credit performance.
    • Additionally, the Sustainability Accounting and Standard Board state that PIMCO has launched a dedicated Environmental, Social and Governance (ESG) investment platform that offers fixed income solutions to investors who seek to attract returns and makes a positive social impact on the consumers.
    • Furthermore, the Sustainability Accounting Standards Board mentions that PIMCO works in accordance with Sustainability Accounting which gives a clear picture of companies’ ESG performance.
    • The Securities and Exchange Commission stated the transparency in PIMCO funds. The company is set to launch environmental specific funds, The Pimco Climate Bond fund, the Pimco Enhanced Short Maturity Active ESG ETF, and the Pimco RAFI ESG US ETF with all information open to the general public. SEC believes the fairness and transparency in the company’s approach.

    AWARDS & MENTIONS

    FAMOUS EXECUTIVES AT PIMCO REPRESENTING THE INTEREST OF ESG

    Ms. Olivia A. Albrecht

    • DESIGNATION: Executive Office, ESG Business Strategy
    • ROLE: Ms. Olivia A. Albrecht is a member of the executive office in Newport Beach as the head of PIMCO’s ESG (environmental, social and governance) business strategy. She is a notable speaker at various events and conferences, including the CFA Society at New York. She was also a speaker at the Roundtable Discussion organized by the Center on Global Energy Policy.
    • She has been an active speaker on topics including ESG (environmental, social and governance) bond strategies and green bonds.
    • She is responsible across the firm’s core fixed income offerings with a particular focus on global bonds.

    Samuel Mary

    • DESIGNATION: ESG Research Analyst
    • ROLE: Mr. Samuel Mary is the vice-president and ESG research analyst in the London office. He is focused on the integration of ESG (environmental, social, and governance) factors into PIMCO’s portfolio management and credit research.
    • He leads PIMCO’s research on climate change.
    • As per the Extel Survey conducted on UK asset managers, Mr. Mary has been considered as the top-ranked individual for socially responsible investing research in 2017.
    • He has an experience in ESG corporate access and in-house ESG integration framework, based on methodologies that integrate ESG issues within fundamental equity analysis for a specific sector.

    Research Strategy

    The team started the search by finding the information for Pimco with regard to socially responsible investing/ESG investing in the official website of the company. The team also visited press releases of the company along with awards and accolades received by the company in the context of ESG Reputation. The sources mentioned the long list of awards. The awards that were considered focused on the Pimco’s ESG (environmental, social, and governance) and SRI (socially responsible investing) reputation. The research team also used the company website to learn more about famous executives at PIMCO representing the needs/interest of ESG and their role at PIMCO.

    We then looked through surveys and government reports checking any news published. We leveraged sources such as the SASB, IPE, and others. The sources mentioned that PIMCO is the most dedicated ESG or responsible investment analysts, according to data gathered as part of IPE’s Top 400 Asset Managers survey.

    We then looked for expert opinions and public views mentioned in case studies and media articles in sources such as fnlondon.com, barrons.com, and citywireselector.com. The expert opinion of Leslie P. Norton and Joe McGrath, who are the financial experts in their respective industries were also included in the report. The experts mentioned that Pimco had built its ESG database with the scoring model. The model includes data from third-party providers like MSCI, Bloomberg, and Sustainalytic.


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    Part
    08

    Pimco - ESG History

    The Pimco's ESG/SRI offerings were initiated nearly ten years ago. It started by signing the PRI in 2011 with incorporating the ESG investing guidance of the Department of Labor in 2015. In 2016, CEO Manny Roman led the charge to invest more in technology to improve analytical tools. Today, Pimco ESG offerings include Pimco Low Duration ESG, Pimco Total Return ESG, and the recently launched GIS Emerging Markets Bond ESG Fund as part of their socially responsible investing.

    PIMCO ESG/SRI OFFERINGS

    HISTORY

    ESG /SRI OFFERINGS BREAKDOWN

    • Pimco's ESG funds include Pimco Low Duration ESG and Pimco Total Return ESG. These and other ESG accounts together have $10 billion in assets.
    • The Pimco Low Duration ESG fund/offering was incepted on November 19, 2010, and was performing under positive gains with a turnover of 492% and net asset value of $62.2 million.
    • The Pimco Total Return ESG fund/offering was incepted on April 11, 1997, and was performing under positive gains wherein its turnover was reported to be 514% and the net assets value of $37.9 million.
    • On August 05, 2019, Pimco expanded its range of ESG solutions with its PIMCO GIS Emerging Markets Bond ESG Fund as part of their socially responsible investing. In the process of evolving its ESG market solutions, Pimco then converted and made a new name for the PIMCO GIS Socially Responsible Emerging Market Funds into the PIMCO GIS Emerging Markets Bond ESG Fund.
    • In 2010, the PIMCO GIS Socially Responsible Emerging Markets Bond Fund was incepted. It then had an excellent track record which has a reported $680 million in net assets.

    ESG /SRI OFFERINGS PROGRESS

    THREE WAYS THE PIMCO ESG/SRI OFFERINGS ARE BETTER THAN OTHER ASSET MANAGERS

    LEADER IN ESG INVESTING OFFERINGS

    • Pimco became a great leader when it comes to investment processes and ESG factors during the past few years. The reason for this was that ESG bonds are considered to be long-term investments, and ESG risks take quite some time (years) before they materialize.
    • Also, the Pimco ESG offering model is considered to be a benchmark for other investment managers to look at who is willing to start incorporating sustainability criteria in their practices as "Pimco has done the deepest integration on the bond side," says Jeff Gitterman, an influential financial advisor with an ESG practice.

    PIMCO'S UNIQUE ESG SCORING SYSTEM

    • At an initial stage, the Pimco ESG portfolio excludes issuers who are fundamentally misaligned with sustainability principles. Furthermore, the Pimco's credit research team uses a proprietary ESG scoring system to assess the ESG profile of the issuers and covers their ESG performance-based evaluation as compared to the peers with a goal to separate the leaders from laggards. Additionally, it engages with the issuers to influence their ESG performance over time, giving them a greater impact by allocating capital.

    PIMCO'S UN PRI ASSESSMENT REPORT

    • Showcasing the company's deep and breadth integration towards ESG integration and as a firm rating as a top of the game in responsible investing as compared to peer investment managers in the industry, the UN PRI Assessment report in 2018 rated Pimco ESG investing an A+ rating (highest score) across every single indicator highlighting its evolution and strong improvement in ESG and sustainable investing.

    Research Strategy

    To obtain the detailed insights on the Pimco's ESG and SRI offerings along with its history, progress and the three ways of explaining the differentiating/unique factor that makes them better than other asset managers who practice ESG/SRI investing, we searched through the Pimco's official website and thoroughly explored their annual reports, ESG purpose, investing report, investors and annual reports. The team also looked into related news articles and press release from Barrons, Bloomberg, Global Wire, and others.

    Through the search, the insights on Primco's primary focus on ESG investing was found. Additionally, we found that it was incorporated based on the Integrated Environmental, Social, and Governance (ESG) factors of the company's investment process. It was also a way to develop innovative ESG solutions for clients. Furthermore, the details on its history along with its ESG offerings such as Pimco Low Duration ESG, Pimco Total Return ESG, and the recently launched GIS Emerging Markets Bond ESG Fund, as part of their socially responsible investing was found. The search also shared deeper insights on the company's ways in differentiates its ESG /SRI offerings from other asset managers which are unique, provide better ESG impact for the clients and are highest rated in the ESG/Sustainable investing industry.

    Sources
    Sources

    From Part 01
    Quotes
    • " The main themes this year will continue to include existing key areas of focus, such as climate change, human capital management, and cyber security. "
    • "However, additional topics, such as the growing scrutiny of unsustainable practices by consumers and the potential social risks associated with technology will also begin to surface more frequently. "
    Quotes
    • "Moving forward from the #MeToo moments and other corporate scandals of 2018, investors remain focused on the actions of company leaders."
    • " More than 350 companies including Danone, Coca-Cola, and Unilever signed on last year to the New Plastics Economy, an initiative aimed at eliminating unnecessary plastic, recycling existing plastic, and redesigning products to make them more environmentally friendly."
    Quotes
    • "With growing expectations for organizations to operate in an environmentally and socially conscious way, Environmental, Social and Governance (ESG) incentive plan metrics are increasingly being considered as effective tools to reinforce positive actions. "
    Quotes
    • "Experience shows that companies that are truly committed to executing their ESG policies make them a “senior management priority” of the CEO or general counsel, (and tie compensation to ESG metrics.) "
    Quotes
    • "Walmart provides access to high-quality, affordable food and other essential products to people around the world. We strive to do this in a way that enhances economic opportunity, promotes long-term environmental and social sustainability, and strengthens local communities. We believe this approach creates value — for our business and for society"
    Quotes
    • "This will be the year for gender diversity aiming towards 30 percent plus of public company board members being female. "
    • "Starting in 2020, Institutional Shareholder Services (ISS) will vote “No” on re-election of Nominating and Governance chairman if their company does not have at least one woman on their board."
    Quotes
    • " Though age or term limits and diversity quotas are not presently required in the U.S., there is increasing attention on overall board composition."
    Quotes
    • "According to an ISS publication on U.S. Board Diversity Trends in 2019, 45% of new board positions among the Russell 3000 were filled by women in 2019, up from 34% in 2018, and a substantial improvement compared to only 12% in 2008. "
    • "According to the WSJ, one in eight S&P 500 boards was all male in 2012. In 2019, women hold 27% of all S&P 500 board seats, up from 17% in 2012—certainly an improvement, but still far from anyone’s idea of gender parity. "
    Quotes
    • "The Society for Human Resource Management did a follow-up survey of more than 18,000 workers and supervisors, which showed that 1 in 3 executives had changed their behavior in the workplace following #MeToo and that 72% of employees were "happy with their employer's efforts to stop sexual harassment.""
    From Part 03
    Quotes
    • "The BlackRock Impact World Equity Fund seeks to achieve exposure to equity securities with a measurable positive societal impact. The Fund will seek to achieve this investment objective by taking long and synthetic long exposures. "
    Quotes
    • "The Fund aims to maximise the return on your investment through a combination of capital growth and income on the Fund’s assets. The Fund invests at least 70% of its total assets in the equity securities (e.g. shares) of companies globally whose predominant economic activity comprises the research, development, production and/or distribution of future transport technology."
    Quotes
    • "The Nutrition Fund seeks to maximise total return. The Fund invests globally at least 70% of its total assets in the equity securities of companies engaged in any activity forming part of the food and agriculture value chain, including packaging, processing, distribution, technology, food- and agriculture-related services, seeds, agricultural or food-grade chemicals and food producers."
    Quotes
    • "BlackRock currently manages a broad suite of dedicated sustainable investment solutions ranging from green bonds and renewable infrastructure to thematic strategies that allow clients to align their capital with specific outcomes, such as the UN Sustainable Development Goals."
    Quotes
    • "In February 2015, BlackRock appointed Deborah Winshel to help unify its approach to impact investing through the launch of BlackRock Impact, the Firm’s global platform catering to investors with social or environmental objectives. "
    Quotes
    • "The Fund aims to maximise the return on your investment through a combination of capital growth and income on the Fund’s assets. The investment adviser (IA) has discretion to select the Fund's investments, provided that: the Fund will invest at least 70% of its total assets in fixed income (FI) securities within the J.P. Morgan ESG Blended Emerging Market Bond Index "
    • "The IA may analyse these characteristics using data provided by external ESG score providers, proprietary models and local intelligence. The Fund will not invest in FI securities which do not meet the IA’s ESG criteria."
    Quotes
    • "The Fund aims to maximise the return on your investment through a combination of capital growth and income on the Fund’s assets. The investment adviser (IA) has discretion to select the Fund's investments, provided that the Fund will invest at least 70% of its total assets in fixed income (FI) securities within the JP Morgan ESG Emerging Market Bond Index Global Diversified"
    • "The IA may analyse these characteristics using data provided by external ESG score providers, proprietary models and local intelligence. The Fund will not invest in FI securities which do not meet the IA’s ESG criteria."
    Quotes
    • "The Fund aims to maximise the return on your investment through a combination of capital growth and income on the Fund’s assets. The investment adviser (IA) has discretion to select the Fund's investments, provided that: the Fund will invest at least 70% of its total assets in fixed income (FI) securities within the J.P. Morgan ESG Corporate Emerging Market Bond Index Broad Diversified"
    • "The IA may analyse these characteristics using data provided by external ESG score providers, proprietary models and local intelligence. The Fund will not invest in FI securities which do not meet the IA’s ESG criteria."
    Quotes
    • "The Fund aims to maximise the return on your investment through a combination of capital growth and income on the Fund’s assets. The investment adviser (IA) has discretion to select the Fund's investments, provided that: the Fund will invest at least 70% of its total assets in fixed income (FI) securities within the J.P. Morgan ESG Government Bond Index-Emerging Market Global Diversified "
    • " The IA may analyse these characteristics using data provided by external ESG score providers, proprietary models and local intelligence. The Fund will not invest in FI securities which do not meet the IA’s ESG criteria."
    Quotes
    • "The Investment Adviser (IA) will select investments which are liquid (i.e. can easily be bought and sold in the market) and will take into account environmental, social and governance (“ESG”) characteristics. The IA intends to exclude issuers which (a) have exposure to sectors which include controversial weapons (nuclear, cluster munitions, biological-chemical, landmine, depleted uranium, or incendiary weapons), thermal coal extraction and generation, and tobacco and (b) are deemed to have breached one or more of the ten UN Global Compact Principles (a UN initiative to implement universal sustainability principles)"
    Quotes
    • "With nearly $6 trillion in assets under management, BlackRock is the largest asset management firm and one of the most powerful investors in the world."
    Quotes
    • "BlackRock is also a member of the Climate Bonds Initiative, an international, investor-focused not-for-profit focused on mobilising the USD100 trillion bond market for climate change solutions. The firm owns and manages more than USD8 billion in green bonds allocated to different portfolios."
    • "BGRN offers exposure to hundreds of investment grade green bonds whose proceeds are applied toward projects with environmental benefits."
    Quotes
    • "BlackRock, which won awards for best fixed income ESG fund and best fixed Income ESG research. "
    Quotes
    • "BlackRock has thrown its weight behind the sustainable investment movement by becoming the first asset manager to publish the environmental, social and governance (ESG) ratings of companies across its entire iShares investment portfolio."
    • "The world’s largest asset manager, with $6.32 trillion under management, also launched six new sustainable equity exchange-traded funds (ETFs), which target a 30% carbon reduction compared with six parent MSCI indices with no loss of performance."
    • "Since the company launched its first full suite of six ESG-screened funds in October last year, it has seen investment in ESG assets grow twice as quickly as in the previous 10 months. The ESG funds have attracted eight times the traffic on BlackRock’s iShares ETF platform as its conventional ETFs."
    Quotes
    • "And the $US7 billion that BlackRock manages in sustainable ETFs, whilst about 25 per cent of the current market, is a fraction of the $US1.75 trillion in all BlackRock’s ETFs."
    Quotes
    • "In addition, it has launched six new ESG funds in Europe, known as UCITS, and its iShares website now discloses ESG and carbon intensity metrics alongside existing portfolio characteristics for all its ESG ETFs, which number a dozen in the U.S. BlackRock expects to expand disclosure of those metrics to all its iShares ETFs by early next year."
    • "The world’s largest asset manager has bundled six existing ESG ETFs plus a new bond ESG ETF into a core portfolio lineup, called iShares Sustainable Core, and it has introduced an ESG Portfolio Analyzer that advisors can use to score entire portfolios for their environmental, social and governance metrics."
    Quotes
    • "Assets invested in sustainably invested exchange traded funds will rise from the current $25 billion to $400 billion by 2028, according to an analysis of market trends by BlackRock"
    From Part 06