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Our Commitment to ESG

Balancing investment & ESG considerations to mitigate risk and improve return outcomes

For many investors, considerations towards Environment, Social and Governance (ESG) issues are material in the context of constructing portfolios. This comes from prominent and tangible global concerns surrounding climate change, diversity, human rights, water supply and investing for impact as top of mind themes.

We understand the importance of considering these and other related ESG considerations when we invest. As a high grade global sovereign bond manager, we differ in our monitoring and analysis from an equity or credit investment manager as these types of managers tend to engage directly with a large universe of firms across a range of industries/sector, as well as pouring over more micro financial statements. Instead, we at JCB focus on macro inputs as it relates to individual countries in our predominately developed market universe.

Our approach to ESG

We incorporate ESG factors by combining slower and nearer-term moving economic and financial market indicators as key inputs into our investment decision-making process. We access a range of off-the-shelf and tailored sources to build a picture of the critical themes we need to integrate into our models and thinking. When we combine these inputs with our judgement and experience, we are able to create portfolios which balance investment and ESG considerations.

"We have deliberately implemented a clear and pragmatic approach to ESG. Each step is additive to overall decision-making with very real outputs."
Paul Chin, Director, Head of Investment Strategy & Research

Over time we believe that returns can be enhanced and risk can be mitigated through a deliberate (but not overriding) ESG approach. The following ESG pillars are integrated into the JCB investment process:

  • We deal with high grade sovereign bonds (i.e. sovereigns, semi government, agencies, supranationals).
  • We primarily apply (though not always) a variety of spread strategies (vs being outright long, for example) – we do not replicate the index.
  • We recognise that a range of ESG issues have impacts.
  • We liaise and promote with issuers, but we’re realistic in what we can impact.

As an active high grade bond manager, we continuously look to implement best practice approaches to ESG. Contact us for more information or for a copy of our ESG policy.

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