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.
Michael Viehs joined the international business of Federated Hermes in 2015, initially as part of EOS, and transferred to the Responsibility Office in 2018. He is Head of ESG Integration for all public market equity and credit funds managed from London. As part of that role, he advises the investment and stewardship teams on their integration approach and ensures that they have incisive ESG, sustainability and engagement information at hand to make better investment and engagement decisions for all of our clients. Furthermore, he is responsible for the ESG and stewardship research activities, proving the value-add from engagement and incorporating ESG information in investment decisions. Michael continues to conduct executive- and board-level engagements on environmental, social, governance (ESG), and strategic issues with German publicly-listed corporations.
Prior to this, Michael was Research Director at University of Oxford's Smith School of Enterprise and the Environment. His work on responsible investment, corporate governance, and stewardship has been published in Corporate Governance: An International Review and Annals of Social Responsibility. Amongst others, he is co-author of the widely recognised study “From the Stockholder to the Stakeholder – How Sustainability Can Drive Financial Outperformance” and contributed a chapter on active ownership to the recently published book Re-Imagining Capitalism (Oxford University Press) edited by Dominic Barton, Dezsö Horvath, and Matthias Kipping. He has also presented his work on responsible investing at several high-profile academic and industry conferences around the world.
Michael holds a BSc, MSc and PhD from Maastricht University, School of Business and Economics.
CFA, Head of Research and Sustainable Fixed Income
Mitch joined the international business of Federated Hermes in February 2010 as Head of Research on the Credit team before becoming Co-Head of Credit from 2012 to 2019. In 2019, in addition to his role of Head of Research, he became Head of Sustainable Fixed Income and co-manager of the SDG Engagement High Yield Fund. Prior to this he was Co-Head of Credit Research for the global credit team at Fortis Investments. Other roles at Fortis include portfolio manager of European high yield funds, based in London, and senior credit analyst, based in Paris. Before this he worked as an associate analyst in the leveraged finance group at Moody’s Investors Service in New York. Mitch earned a Master’s degree in International Affairs at Columbia University in New York City and a Bachelor’s degree in History at Pitzer College, one of the Claremont Colleges in California. He is a CFA charterholder; Co-Chair of the Capital Markets Advisory Committee of the IFRS Foundation; founding member of the Executive Committee for the European Leveraged Finance Association; member of the Sovereign Working Group and the Credit Rating Advisory Committee for the PRI; member of the technical Working Group (Communications and Technology) for the US-based Sustainability Accounting Standards Board (SASB); a workstream member of the UK-China Green Finance Task Force; and sits on the Green Finance Advisory of the City of London.
In this two-part paper, we assert that the shared interests of bond and shareholders in companies provide incentives to jointly engage companies – and generate positive outcomes by doing so. In this first instalment, we dispel the fallacy that the imperatives of bond and shareholders typically diverge, and argue that their common standing as financial stakeholders gives them the legitimacy to engage corporate boards and management teams to encourage sustainable growth and long-term value creation.