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Pricing ESG risk in credit markets: reinforcing our conviction

To analyse credit risks with greater precision, we developed a pricing model last year to capture the influence of environmental, social and governance (ESG) factors on credit spreads. It showed a convincing relationship between ESG risk and credit spreads, manifesting as an ESG-risk curve.

After expanding this research, we found this relationship between ESG risk and credit spreads to be reinforced.

More Insights

Authenticity in ESG integration
We explain why the delivery of Sustainable Wealth Creation has and always will be our core purpose.
Pricing ESG risk in credit markets: through volatility, our conviction affirmed
Companies with better ESG practices tend to have lower CDS spreads, even after controlling for credit risks.
Tackling decarbonisation in credit portfolios
We believe that it is possible to invest and create value while also working to prevent the unfolding climate crisis.
A changing climate in fixed income: 360°, Q1 2021
In a sustainability-focused edition of 360°, we explore how sustainable finance shifted from a niche corner of the market to a position of prominence.
The greenness of the EU budget: implications for fixed income and industry
The EU’s significant budget allocations to address the climate crisis supports the decarbonisation of the economy whilst also securing the permanence of sustainable fixed income.
Credit investors: delivering into the imperatives of Paris
In this video Anna Karim, Investment Director Fixed Income, and Mitch Reznick, Head of Research and Sustainable Fixed Income, discuss how to decarbonise portfolios within fixed income and the imperative of aligning investment strategies with the Paris Agreement.