(August 2020)
High yield ESG bonds – almost sounds like an oxymoron. Companies in the high yield space are generally not known for their green policies, so the association may seem counterintuitive. However, as it turns out, using ESG screens on high yield portfolios leads to good returns, especially during the pandemic. During the worst of the pandemic meltdown in March and April, using ESG as a screen on high yield led to outperformance of benchmarks. The main reason why was that ESG screens naturally eliminated some of the biggest losers, such as energy companies and those with the very lowest credit ratings.
Source: https://www.bankingexchange.com/sri-exchange/item/8380-sri-and-high-yield-does-it-work
(New York)
FINSUM + Magnifi: These findings essentially mirror what happened in equities as well. ESG really proved to be a key driver of returns during a period of crisis – interesting to know for the future.
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