ESG in Emerging Markets Debt

Friday, January 10, 2020

A robust, disciplined research process helps our emerging markets debt team better uncover mispricing, and ESG is an important component of that process: It provides a lens through which we can assess ESG-related risks while supplementing our views with external analysis and big data.

We fully integrate ESG factors in a structured, quantitative, and qualitative process that provides a holistic assessment of an issuer’s opportunities and risks.

Our ESG process is analyst-driven because we believe having an intimate relationship with issuers helps us understand them, particularly in regard to a topic as important as ESG.

Moreover, the way we created our ESG framework is significant. While cooperation from ESG specialists is important, we believe the process should be driven by people who actually manage portfolios and understand the potential financial and/or reputational risks to issuers and their impact to portfolios. Some frameworks may be implemented firmwide, without accounting for differences in asset classes. Our framework was created by emerging markets debt analysts for emerging markets debt analysis.

In this Q&A, two of our portfolio managers, Yvette Babb and Luis Olguin, CFA, explain how we think about ESG and use it to help create sustainable value on behalf of our clients.

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