Sustainable Fixed Income | Federated Hermes

To unlock a world of sustainable fixed income with values-based outcomes, you need the right combination of expertise, ESG integration and stewardship. Our capabilities provide the key.

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Our Sustainable Fixed Income strategies:

Crack the Sustainable Fixed Income code

It’s about the journey companies are on; not where they are today.

Our approach

We believe that assessing sustainability is a forward-looking endeavour: it’s about companies’ future potential; not just where they are today.

This is why engagement is key – and it’s also why sustainable investing is as much a qualitative process as it’s a quantitative one.

Our dedicated engagers are embedded within our investment teams. Their engagements are client focused, relationship based and tailored to specific sector, thematic or company challenges.

Our library of real-world case studies provides an extensive track record of positive outcomes through engagement.

Environmental and societal goals are difficult to measure

Our approach

We employ research from multiple third-parties, but also use our own ESG scores.

We perform fundamental research through proprietary tools (such as the ESG Dashboard, QESG score, ESG Portfolio Monitor, Corporate Governance Tool and our Carbon Tool) and have resources dedicated to this.

While we do make use of third-party assessments, our forward-looking views are guided by our own, proprietary, independent assessments of sustainability credentials.

Can you trust claims of sustainability?

Our approach

Our sustainability credentials have been decades in the making.

We led the drafting of the Principles for Responsible Investing and our SDG Engagement strategies were among the first of their kind to be launched.

We were rated 1st among asset managers globally for ESG integration in 2022.*

With US$1.4tn under advice, our stewardship team, EOS at Federated Hermes, is a pioneer of effective stewardship.**

The industry is new. Track records are short and at a premium

Our approach

Our pedigree in sustainability dates back to 1983 and the funds in our Sustainable Fixed Income range are an evolution of a process that has been in place since 2010.

The strategies in this range are founded on a tried-and-tested heritage dating back many decades.

It’s about more than just sustainability – it’s also about seeking financial outperformance

Our approach

Strategies in our Sustainable Fixed Income range have dual, self-reinforcing objectives: they aim for sustainable outcomes while also seeking economic value and financial outperformance for our clients.

These objectives are self-reinforcing because companies with poor behaviours around sustainability tend to be at greater risk of underperforming, while those with improving sustainability practises tend to experience lower levels of risk and volatility.

We believe companies that understand and respond to this dynamic will be more resilient over the long-term and so more likely to provide a positive financial return for investors.

* SCOPE Fund Analysis, 4 July 2022. SCOPE analysed information from 30 large international fund managers, taking into account 58 topics covering areas such as investment processes and corporate governance as well as stewardship efforts to encourage portfolio companies to act more sustainably. ** Source: Federated Hermes, 30 June 2023.

Winner - Engagement

ESG Clarity Awards, 2023

$ 0 tn

Our assets under advice

companies engaged in 2022

★★★★★

PRI rating for Policy Governance, Fixed Income and Real Estate*

Past performance is not a reliable indicator of future results

Source: Federated Hermes as at 31 December 2023. Please note, the total AUM figure includes US$48.8bn managed by Federated Hermes Limited, of which US$7.8bn of assets are managed or under an advisory agreement by Hermes GPE LLP (“Hermes GPE”). US$99.1m of total group AUM figure represents Federated Hermes Limited mandates under advice. *In 2023, FHL received 5 stars in the Policy Governance and Strategy, Fixed Income Corporate, Fixed Income Securitised, Fixed Income Private Debt, Real Estate and Infrastructure modules. We scored 4 stars on the Listed Equity – Active Quantitative, Listed Equity – Active Fundamental, Fixed Income SSA, Private Equity and Confidence Building Measures modules.

Our Strategies

Whatever your focus, our strategies offer the flexibility to invest in Sustainable Fixed Income with a broad range of preferences in mind.

Sustainable

Thematic and values-based approaches for sustainable outcomes.

Mission-led investment strategies to create positive impact.
Best-practice integration of ESG analysis and engagement insights
Exposure to sustainability themes and to ESG leaders that reflect sustainability values
Delivery of sustainable outcomes through effective stewardship

Impact

Mission-led investment strategies to create positive impact.

Financial and impact objectives
Best-practice integration of ESG analysis and engagement insights
Focus on companies generating impact or undergoing positive transformation
Some capabilities may enforce exclusions that reflect defined sustainability values, impact considerations, or both
Delivery of positive impact outcomes through active investment and effective stewardship

Sustainable Global Investment Grade Credit

In short: Investing in the debt of companies aligned to sustainable outcomes.

Investing in investment-grade credit issuers, globally, seeking to achieve financial outperformance and sustainable outcomes.

Climate Change High Yield Credit

In short: Investing in the debt of companies aligned to the low-carbon transition.

The strategy aims to outperform the global high-yield market through high-conviction investment in companies with strong fundamentals that also demonstrate the potential to decarbonise and transition to a low-carbon world.

SDG Engagement High Yield Credit

In short: Investing in the debt of companies and engaging with them to promote progress towards the UN’s Sustainable Development Goals.

The strategy seeks to invest in global high yield issuers with strong fundamentals that also demonstrate the potential, through engagement, to create positive change. The investment team uses the UN’s Sustainable Development Goals (SDGs) – an ambitious, universal set of objectives seeking global prosperity and environmental integrity by 2030 – as a framework for engagement.

Solve the sustainability puzzle

With over US$700bn* of assets under management, we are a global investment manager with operations in London, Pittsburgh, New York, Boston and Asia.

Our pioneering approach to stewardship, innovative ESG strategies and advocacy for a financial system that works for all means we have been at the forefront of sustainable investing since 1983.

*Source: Federated Hermes, 30 June 2023

The DNA of sustainable investing

"For many companies, refinancing is an annual ritual. This means investors have the opportunity to pressure corporate leaders on the need to be more sustainable every time a company wants to sell more debt."

"Simply being able to talk to and advise business chiefs is a useful thing that can bring about positive change"

Mitch Reznick

Head of Research and Sustainable Fixed Income at Federated Hermes

Seamless integration

We believe integrating ESG and sustainability considerations coupled with active engagement is critical to sustainable long-term performance.

High-conviction

We believe an active credit-selection process, guided by top-down analysis is essential to outperforming in both bull and bear markets.

Issuer selection

We look to an investment universe beyond the US and Europe including emerging markets based on our experience that this creates more opportunities and diversified sources of return.

Security selection

We believe that searching capital structures for optimal instruments opens opportunities.

Downside defence

We seek to preserve capital in down-market environments. We believe that this downside defence can improve risk-adjusted returns.

Want to know about the rest of our fixed income range?

Investments

Our capabilities provide the key.

Our capabilities provide the key.

EOS Stewardship

Find the right combination

Quick links

Our Sustainable Fixed Income strategies:

Crack the Sustainable Fixed Income code

Our approach

Our approach

Our approach

Our approach

Our approach

Our Strategies

Sustainable

Impact

In short: Investing in the debt of companies aligned to sustainable outcomes.

In short: Investing in the debt of companies aligned to the low-carbon transition.

In short: Investing in the debt of companies and engaging with them to promote progress towards the UN’s Sustainable Development Goals.

Meet the managers

Solve the sustainability puzzle

The DNA of sustainable investing

Seamless integration

High-conviction

Issuer selection

Security selection

Downside defence

Latest sustainable fixed income insights

The value of investments, and income from them, may go down as well as up, and you may not get back the original amount invested.

Sustainability.
We mean it.

Your preferences

CONNECT

Investments

Our capabilities provide the key.

Our capabilities provide the key.

EOS Stewardship

Find the right combination​

Quick links

Our Sustainable Fixed Income strategies:

Crack the Sustainable Fixed Income code

Our Strategies

Sustainable

Impact

Meet the managers

Solve the sustainability puzzle

The DNA of sustainable investing

Seamless integration

High-conviction

Issuer selection

Security selection

Downside defence

Latest sustainable fixed income insights

The value of investments, and income from them, may go down as well as up, and you may not get back the original amount invested.

Sustainability. We mean it.

Your preferences

CONNECT

Find the right combination

Sustainability.
We mean it.