Role of ESG at Merganser
As an active fixed income manager with expertise across corporate credit and securitized assets, incorporating ESG-related considerations into our underwriting process may enable us to enhance risk-adjusted portfolio returns through better protection against downside risk and position portfolios to prosper from potentially significant shifts as the global economy adapts to future technologies. Further, we believe that ESG considerations should not be viewed in a vacuum but as one set of factors to consider in the broader mosaic of an informed investment decision.
Consistent with our overall investment approach, we assess ESG risk factors at the security level during the credit underwriting process. ESG-related attributes will be meaningful depending on the issuer profile and underlying business. For each issuer the material ESG risk factors should be noted and assessed. It is likely that risk factors will be similar across a particular industry and a comparison with peers can be made. Risk factors should be considered across various time horizons as this may impact the choice of the term of investment in a particular issuer.
These factors will be reviewed as part of the credit discussion within the sector teams. Analysts will supplement their own proprietary research with ESG data available through the Bloomberg terminal, ESG opinions issued by the nationally recognized statistical ratings organizations, and data and ESG ratings/opinions available from any third-party research organizations to which Merganser may subscribe. ESG factors will be woven into the credit assessment of an issuer along with traditional financial metrics and used to determine a security’s relative value.
Additional ESG Capabilities
Instead of offering a branded ESG product, we’ve chosen to integrate ESG analysis into the credit underwriting process. Additionally, we work directly with clients to tailor portfolios that consistently and appropriately reflect their values. This could include the use of screens to avoid certain sectors or issuer types in addition to impact investing that focuses on a targeted set of social/environmental themes. Merganser also has extensive experience working with faith-based investors and complying with principles for USCCB investments. We recognize that ESG goals can differ widely by institution, so we endeavor to keep an open mind and be a thoughtful partner to our clients in this regard.
ESG oversight and implementation initiatives are conducted by our Chief ESG Officer, who reports directly to the Managing Principals of the firm. The internal ESG committee is made up of representatives from the Investment Team, the Operations Team, and the Marketing and Client Service Team. The Chief ESG Officer works together with the committee to develop and enhance Merganser’s investment capabilities and to undertake actions to improve the overall integration effort.