Corporate Bond ESG

Corporate Bond ESG Funds and ETFs invest the majority of their assets... Corporate Bond ESG Funds and ETFs invest the majority of their assets in corporate bonds of firms that prioritize ESG factors in their business practices. ESG refers to Environmental, Social, and Governance. Environmental factors typically include the carbon footprint of a company, as well as any efforts to mitigate this effect. Pollution and waste are other environmental issues within the ESG umbrella. Social factors can include pay equity, the percentage of women and racialized minorities in upper management, and whether a company has lingering issues of discrimination. From a governance perspective, an ESG framework looks at how well a firm is managed, whether shareholder concerns are addressed and whether a corporation’s risk controls are adequate to prevent fraud or other malfeasance. ESG can be used as either a positive or negative screen. A positive screen looks to include corporate bonds of companies that are leaders on issues of sustainability. Meanwhile, a negative screen omits bonds from certain sectors with issues that cannot be overcome. These might include the oil and gas, tobacco, and arms industries. A Corporate Bond ESG Fund or ETF may be actively or passively managed, and may, depending on its mandate, invest across different geographies, issuer sizes, and issuer quality (investment-grade to junk). It is important to note that ESG Equity Funds and ETFs can be controversial. Some investors maintain an ESG lens is good investing, while others point to data showing underperformance by funds that use ESG analysis as a key input into their investment decisions. Last Updated: 11/27/2024 View more View less

Corporate Bond ESG Funds and ETFs invest the majority of their assets in corporate bonds of firms that prioritize ESG factors in their business practices. ESG refers to Environmental, Social, and Governance. Environmental... Corporate Bond ESG Funds and ETFs invest the majority of their assets in corporate bonds of firms that prioritize ESG factors in their business practices. ESG refers to Environmental, Social, and Governance. Environmental factors typically include the carbon footprint of a company, as well as any efforts to mitigate this effect. Pollution and waste are other environmental issues within the ESG umbrella. Social factors can include pay equity, the percentage of women and racialized minorities in upper management, and whether a company has lingering issues of discrimination. From a governance perspective, an ESG framework looks at how well a firm is managed, whether shareholder concerns are addressed and whether a corporation’s risk controls are adequate to prevent fraud or other malfeasance. ESG can be used as either a positive or negative screen. A positive screen looks to include corporate bonds of companies that are leaders on issues of sustainability. Meanwhile, a negative screen omits bonds from certain sectors with issues that cannot be overcome. These might include the oil and gas, tobacco, and arms industries. A Corporate Bond ESG Fund or ETF may be actively or passively managed, and may, depending on its mandate, invest across different geographies, issuer sizes, and issuer quality (investment-grade to junk). It is important to note that ESG Equity Funds and ETFs can be controversial. Some investors maintain an ESG lens is good investing, while others point to data showing underperformance by funds that use ESG analysis as a key input into their investment decisions. Last Updated: 11/27/2024 View more View less