ShareAction asks for forceful engagement

Sleeping Giants – are bond investors ready to act on climate change? is a new report from ShareAction based on 22 in-depth interviews with asset managers, asset owners and other corporate bond market professionals.

The report finds that ESG risks are well understood by bond investors and consideration of ESG factors is generally already part of their investment processes. However, bond investors baulk at the suggestion they might use their ability to refuse to refinance company debt to press for stronger climate action.

The report finds that bondholders are focused on mitigating portfolio level climate risk, but are not yet willing to commit to action on climate change itself.

As a result, ShareAction is calling on institutional bondholders to assume a more ambitious interpretation of their fiduciary duties, recognising the serious harm to beneficiaries’ interests if global temperatures are not contained beneath scientifically agreed limits.

Wolfgang Kuhn, the author of the report, says: “You can build your house on a hill to protect it from rising sea levels, but it won’t stop the sea from rising. Bond investors have come a long way very quickly on the sustainability dimension. What is left is to realise the power they have to create a positive impact and muster the courage to use it.”

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