We are committed to integrating sustainability into our investments and aspire to observe the UN's Sustainable Development Goals.
Responsible Investing and ESG Policy
Our investment professionals and our leadership team understand sustainability factors are worth consideration not only to mitigate risk, but also to identify opportunities. By viewing investments through a sustainability lens, we can more effectively assess each opportunity, resulting in more thoughtful credit selection and potentially better risk-adjusted performance for clients.
As a 2010 signatory to the United Nations Principles for Responsible Investing (UN PRI) under our parent company, Principal Asset Management , we incorporate sustainability into the day-to-day research discipline of the entire investment team. The principles we use to guide our decisions are based on the premise that sustainability issues have the potential to impact the performance of investment portfolios.
More than a decade ago, we realized sustainability factors may have long-term impacts on returns. To elevate our due diligence, we developed a proprietary quantitative ESG scoring model to augment our deep sector-level knowledge. Our ESG scorecard is designed to equally weight environmental, social, and governance factors for the credits we underwrite. While there are third-party providers that some of our peers may use to score companies on sustainability-related factors (and while we have access to this data), we believe our approach has potential benefits, in part because these third parties often use more of a "relative" approach comparing companies only to others in their sector (as opposed to our more "absolute" approach). In addition, because the high yield and senior loan markets have significant exposure to privately owned companies (where third-party data is not available), we believe having our own proprietary sustainability evaluation tool is critical.
Our ESG Group, comprised of an inter-disciplinary team of senior leaders from across the firm, guides the evolution of our sustainability efforts across both investing and operational activities.