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Fixed Income's 2022 ESG engagement report

Franklin Templeton Fixed Income's 2022 ESG engagement report highlights transparency as the bedrock of sustainable finance

Transparency should be the bedrock of sustainable finance, while engagement is the essence of a transparent flow of information between issuers, investors and other market participants.

David Zahn, Head of European Fixed Income, Franklin Templeton Fixed Income says: “Through our engagements we are committing to the development of a sustainable finance ecosystem that delivers the best results for everyone involved.”

The latest ESG engagement report’s main themes include:

  1. Transparency, which is key for improving data quality. As the importance of non-financial metrics increases due to client demand, more types of data—quantitative, qualitative, and spatial—are being integrated into the decision-making process to fully grasp environmental and social impacts and dependencies.
  2. Most companies adopt certain best practices, improving technical capabilities and disclosure language. Lagging issuers are at a disadvantage from the perspective of ESG-oriented investors, as asset managers will continue to conduct annual engagements to fulfill both the expectations of their clients and regulators.
  3. The energy transition is likely the most urgent step in mitigating climate change. Issuers are undertaking various projects which entail not only investing in the deployment of well-known renewable energy sources, but also smart electricity and gas grids that allow for efficient integration of low-carbon and renewable sources into the network.
  4. Climate change is interconnected with the biodiversity crisis. Commitments from the public and private sectors to curb biodiversity loss, as well as the dependencies and impact of business sectors on nature, affirm to us that it must be factored into portfolios.
  5. Societies around the globe are weathering violent and uncertain conditions related to health, safety, rule of law and the rising cost of living.

Download the full paper


 

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