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Morningstar

PIMCO Investment Grade Credit Bond Instl PIGIX Sustainability

Morningstar Analyst Rating
| Analyst rating as of | See PIMCO Investment Hub

Sustainability Analysis

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Sustainable Summary

Sustainability Summary is not assigned to this investment.

Morningstar generates quantitatively driven content that covers the Environmental, Social, and Governance (ESG) characteristics for managed investments that have both a Morningstar Sustainability Rating and a Carbon Risk Score, called the Sustainability Strategy Summary. This share class’ Sustainability Summary content was not generated because of insufficient data. To generate individualized content, the Sustainability Summary requires sufficient data to create its framework of “mental models” designed to mimic content written by analysts. The Sustainability Strategy Summary uses an algorithm designed to predict the ESG analysis that analysts would produce on the investment product if they covered it.

ESG Commitment Level Asset Manager

 | Basic  | by Eric Jacobson,

Pimco has actively engaged with numerous ESG organizations and consortiums in recent years, but its efforts expanded in 2016 when the firm launched its ESG initiative. That included the buildout of an ESG team led by senior leaders, including CIO of US core strategies Scott Mather and global head of credit research Christian Stracke. That group has a small dedicated investment staff, but the day- to- day work of judging and engaging with individual bond issuers, as well as buying and selling based on ESG criteria, falls to 65- plus analysts and scores of portfolio managers across bond market sectors, including securitized products, municipals bonds, corporate credit, sovereign, and green/ sustainable bonds.

In addition to typical investment management decisions, ESG considerations include ESG-related business practices, global sustainability norms, and receptivity to engagement. The effort is relatively new though. Pimco does not employ exclusions across assets under its management, and strategies intentionally designed to hew to ESG principles are still a fraction of its business. Given its hard-charging investment culture, it’s difficult to imagine the firm's identity becoming synonymous with ESG, but Pimco has demonstrated a willingness to invest the resources necessary to build credibility in the space. In addition to the buildout of its ESG leadership and staff, the firm has developed its own proprietary analytical framework and draws on the research provided by numerous external ESG sources.

Unlike equities, bonds don’t have ownership rights, so bond-focused asset managers have fewer tools to influence issuers. Large debtholders can wield power, though, and Pimco has demonstrated a willingness to actively engage with issuers in efforts to improve their adherence to ESG principles. The firm reported having engaged in-depth with more than 175 issuers in 2019, with the majority of those efforts focused on environmental risks and so-called green bond related frameworks. Pimco is also a member of numerous external organizations and coalitions actively involved in policy advocacy.