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.