Since 2014, we have been formally incorporating environmental, social and governance (ESG) factors into our investment process, including fixed income research. As a component of our manager research process, manager research analysts assign an ESG rank to individual strategies. Our observations of market trends assist us in identifying leading market practitioners around ESG considerations and implementations in their investment processes.While ESG was initially a hot topic for equity investors, fixed income market investors are taking notice and practitioners are quickly catching up. At Russell Investments, we have observed the rapid expansion in ESG integration practice among fixed income asset managers in recent years.In this blog, we aim to share some key ESG integration trends we see among the fixed income market practitioners. Our observations are derived from the findings from our 2019 Annual ESG Manager Survey and discussions with a number of fixed income market practitioners.

ESG for fixed income investing

Before diving into our observations, we believe it’s helpful to compare the history of ESG considerations in fixed income investing to equity investing. The primary difference is the fiduciary duty associated with proxy voting and shareholder engagement (proxy and engagement) for equity investment managers.