Environmental, social and governance (ESG) risks continue to impact the global credit markets, and over the last year investors have had to contend with ESG risks ranging from environmental incidents, money laundering allegations and unethical healthcare pricing practices to new and evolving risks such as cyber security. As we discussed in our inaugural ESG Fixed Income Engagement Report last year, these risks can have a material impact on an issuer’s credit profile, cost of capital and ultimately the performance of a portfolio. Engagement with issuers remains an important tool, not only to identify and better understand ESG risk factors, but also to set objectives with issuers that we believe will reduce credit risk and promote positive outcomes for people and the planet.
Consistent with Neuberger Berman’s commitment to firm-wide collaboration on ESG, we have incorporated the engagement activities of our Emerging Markets Corporate Credit research team within this year’s report and expanded the scope to global corporate fixed income markets. We are proud to report that our global corporate fixed income team conducted 984 issuer engagements covering 1,450 ESG-related topics between July 1, 2018 and June 30, 2019. Within this paper, we provide an update on our engagement activities, discuss how we prioritize our engagements with issuers and describe recent engagement trends. Our highlighted case studies provide insight into the framework we use to engage with issuers on important ESG topics to promote positive outcomes for creditors and broader stakeholders.