ESG fixed income fund of the year: Brown Advisory's Sustainable Bond Fund

Channels: ESG

Companies: Brown Advisory

Brown Advisory's fixed income team believes that by integrating environmental, social and governance (ESG) factors into their bond research process, they're able to identify risks that might not be revealed through fundamental analysis alone.

The ESG research team conducts an in-depth ESG Risk Assessment, as well as a Sustainable Opportunity Assessment, for every candidate for the fund. This analysis is conducted across all fixed income sectors, including corporates, securitized products, sovereigns/supranationals, and taxable municipals.

Given that little to no third-party ESG data exists for most fixed income issuers and sectors, the managers rely heavily on our proprietary in-house research.

In addition, by engaging with bond issuers on the issue of impact - more than 60 times in 2019 alone - the firm considers it has an edge over most fixed income managers who don't engage. These engagements enable it to improve its fundamental and ESG research, and deliver better performance and impact.

Combining these two elements – of ESG research and engagement – has helped Brown Advisory's Sustainable Bond Fund to be judged the winner of the ESG fixed income fund of the year category.

The firm's ESG research team has developed 10 impact themes that the fund looks to address, under three broad headings:

Economic Development and Social Inclusion

1. Affordable Housing

2. Economic Mobility and Community Development

3. Education

4. Diversity, Inclusion and Equality

Health & Wellbeing

1. Health & Wellness

2. Clean Water & Sanitation


1. Sustainable Technology Innovation

2. Efficient Production & Conservation

3. Clean Energy

4. Sustainable Agriculture/Natural Resource Management.

Each of these themes contributes to at least one of the SDGs.

The fund invests in securities that target these impact themes, where the security has been identified as being in one of three separate buckets. The first bucket is for bonds labelled green, social or sustainability, the second is for bonds that are unlabelled but the use of proceeds are targeted towards areas that fit in with the impact themes. The third is for bonds from issuers that generate impact from their operations or their offerings. EF