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SDG Engagement High Yield Credit Commentary: Enel

The SDG Engagement High Yield Credit Fund focuses on delivering two, co-linear objectives: strong financial performance for investors and positive social and environmental impacts that contribute to the delivery of the Sustainable Development Goals (SDGs). Here we demonstrate how we are engaging with current holding Enel to generate positive outcomes for both society and investors.

Within the SDG Engagement High Yield Credit Fund, we seek two self-reinforcing objectives: performance and impact. In practice, this means we invest in issuers that have the willingness and ability to effect change that supports their credit profile. This is exemplified by our exposure to Enel, an Italian utilities company that generates more than half of its energy from zero-emission sources.

The investment case for Enel is strong. Although the firm has a lower credit rating than its main competitors, it has the strongest balance sheet among its peer group of investment-grade European utility companies. The firm’s bonds remain vulnerable to macroeconomic volatility in Italy, and we seek to benefit from the premium this offers – which we believe does not reflect the company’s positive fundamentals – while also actively supporting electricity decarbonisation through investing in the firm.

In addition, we think that Enel is particularly well placed to align its operations with the delivery of the SDGs through:

  • Expanding its highly competitive renewables portfolio
  • Clarifying its capital allocation plans
  • Making its workforce diversity a source of competitive strength

To find out more about the potential for Enel to deliver SDG-aligned impact and our engagement progress to date, read the full engagement commentary.

Risk profile
  • Nothing in this document constitutes a solicitation or offer to any person to buy or sell any related securities or financial instruments.

  • Past performance is not a reliable indicator of future results and targets are not guaranteed.

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