2023 Fixed Income Engagement Report

November 01, 2023

2023 Fixed Income Engagement Report

Sustainable Investing

2023 Fixed Income Engagement Report

November 01, 2023

At Morgan Stanley Investment Management (MSIM), we believe it is intrinsic to our mandate as long-term, active investors to maintain a constructive dialogue with issuers across their capital structure and support them in aligning with material sustainability objectives that can help generate better financial outcomes. Our Fixed Income organisation has a long history of credit-related engagement. Since 2020 — when we first published our Fixed Income Engagement Strategy — we have been supplementing that with a structured approach to ESG-focused engagement across corporates, agencies and sovereigns.

Over the 12-month period from July 2022 to June 2023, the investment teams within the Fixed Income organisation conducted over 160 engagement meetings with selected bond issuers, continuing to focus on the theme of decarbonisation and adoption of science-based emissions reduction targets. Nevertheless, macroeconomic issues such as the Russia-Ukraine conflict and its implications for energy access and cost, inflationary pressures and the rising costs of living around the world led to a growing focus on social inclusion, labour and human rights, and good governance.

Looking ahead to the rest of 2023, we plan to further evolve socially-related engagement as part of our bilateral meetings with issuers, as well as through selected collaborative initiatives with other investors.

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Barbara Calvi

Executive Director,

Fixed Income Sustainable Investing

Rachel Smith

Analyst,
Fixed Income Sustainable Investing

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Risk Considerations

ESG Strategies that incorporate impact investing and/or Environmental, Social and Governance (ESG) factors could result in relative investment performance deviating from other strategies or broad market benchmarks, depending on whether such sectors or investments are in or out of favor in the market. As a result, there is no assurance ESG strategies could result in more favorable investment performance.

IMPORTANT INFORMATION

The views and opinions are those of the author as of the date of publication and are subject to change at any time due to market or economic conditions and may not necessarily come to pass. The views expressed do not reflect the opinions of all investment personnel at Morgan Stanley Investment Management (MSIM) and its subsidiaries and affiliates (collectively the Firm”), and may not be reflected in all the strategies and products that the Firm offers.

This material is for the benefit of persons whom the Firm reasonably believes it is permitted to communicate to and should not be forwarded to any other person without the consent of the Firm. It is not addressed to any other person and may not be used by them for any purpose whatsoever. It is the responsibility of every person reading this material to fully observe the laws of any relevant country, including obtaining any governmental or other consent which may be required or observing any other formality which needs to be observed in that country.

This material is a general communication, which is not impartial, is for informational and educational purposes only, not a recommendation to purchase or sell specific securities, or to adopt any particular investment strategy. Information does not address financial objectives, situation or specific needs of individual investors.

Any charts and graphs provided are for illustrative purposes only. Any performance quoted represents past performance. Past performance does not guarantee future results. All investments involve risks, including the possible loss of principal.

For the complete content and important disclosures, refer to the full report.