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.
Pricing ESG risk in credit markets: reinforcing our conviction
Not all risk models are built alike. Here, the Global Equities team provide an overview of their proprietary MultiFRAME risk model. During periods of market stress, they argue, it can cut through the noise to provide a true picture of underlying exposures.
The invasion has accelerated the sustainable energy transition, pushing up demand for ‘green’ metals and components required to facilitate electrification, says Olivia Lankester, director of responsible investing & sustainability, global emerging markets, in the latest ESG Materiality newsletter.
In this latest edition of our ESG Materiality newsletter, Olivia Lankester, Director of Responsible Investing & Sustainability, Global Emerging Markets, considers the latest EM response to the net zero imperative.
It’s vital we, the Global Equities team, analyse and measure both how climate change risk can negatively affect investments and how the shift to a low carbon economy creates valuable investment opportunities.