This strategy provides one of the first opportunities within leveraged finance to gain exposure to best-in-class companies from an environmental, social and governance (ESG) perspective.
Leveraging our over 20-year track record investing in the asset class, the strategy provides investors with the opportunity to gain exposure to companies globally demonstrating strong ESG credentials or the intent to implement strong sustainable approaches.
The inclusion of an explicit sustainability objective alongside a financial one, differentiates the investment proposition from other loan strategies – and can help to support investors in achieving their ESG and sustainable investing requirements and goals.
By employing a positive tilt to investing and actively engaging with investee companies, the strategy goes beyond ESG integration, using M&G’s proprietary tools and robust ESG scoring frameworks to proactively measure and mitigate ESG risks and pursue sustainable opportunities. In practice, this means that every investment must pass a minimum internal ESG score threshold for eligibility. A demonstrable and systematic company and owner engagement programme is also a key tenet of the strategy, as well as enhanced ESG reporting and monitoring.
To manage risk and avoid harm, the strategy also incorporates certain screens for verification and exclusion purposes:
This can help to increase the prospect of generating more stable and sustainable investment returns from the loan asset class via the bolstering of protection against downside risk, to which an avowed sustainability focus should contribute.