Incorporating Environmental, Social And Governance (ESG) Factors Into Fixed Income Investment


Authors
Georg Inderst and Fiona Stewart

Research Organisation
World Bank Group

Report Date
June 1, 2018

Document summary

This research report is the result of a partnership between the World Bank Group (WBG) and Government Pension Investment Fund (GPIF) of Japan, and reflects the GPIF’s strategic commitment to advancing the integration of ESG considerations into all asset classes of its portfolio. A growing body of research shows that Environmental, Social and Governance (ESG) factors are material credit risk for fixed income investors. The report details evidence suggesting that incorporating ESG into fixed income investing should be part of the overall credit risk analysis and should contribute to more stable financial returns. It also dispels the myth that incorporating ESG means having to sacrifice financial returns. ESG investing is increasingly becoming part of the mainstream investment process for fixed income investors, as opposed to a specialist, segregated activity, often confined to green bonds

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