The Importance of Fixed Income Engagement

Within fixed income there is a myriad of sub asset classes that provide sources of capital, but each reacts to a sustainable objective in different ways. Meanwhile, unlike equity, debt securities can be specifically structured to direct capital to financing sustainable outcomes. What are the uses and abuses of specific debt instruments? What do these securities say about the overall sustainability credentials of the issuing company? In terms of engagement, given that cash is the oxygen of a company, the debt capital markets can be a profound source of influence on companies through constructive dialogue. But when is the right time to engage and when is the right time to divest? Also, how do we know that engagement is truly effecting positive change, failing or simply greenwashing with insincere engagement? Finally, as investors, we must also be true to that fundamental objective of delivering financial returns. How do we balance the two needs of sustainable and financial outcomes?