Targeting positive societal and environmental impacts focused on the United Nations Sustainable Development Goals (SDGs), as well as attractive returns, Federated Hermes SDG Engagement High Yield Credit Fund concentrates on high yield credit and engagement with companies.
The fund's annual report notes how Hermes made 353 engagement actions, 10% of which involved company chairs or CEOs with 114 companies. These engagements were also mapped to different SDGs with the most intensive being SDG 13 climate action, with 207 engagements, followed by SDG 12 responsible consumption and production with 167 and SDG 7 affordable and clean energy with 108.
"Those that invest with a social or environmental purpose want reporting that draws a straight line from the dollar invested to both the financial returns and to the impact that their investments generate," said Mitch Reznick, head of research and sustainable fixed income at Federated Hermes.
Hermes states its belief that company engagement is a catalyst to positive change and will encourage investee companies to create more resilient businesses, as well as tackle pressing social or environmental needs. The investor believes this positive change should, over the medium- to long- term, be reflected by decreasing credit spreads and ultimately improve the net overall contribution of the industry to supporting delivery of the SDGs.
"Federated Hermes' reporting clearly communicates how the fixed income strategies generate investment success through ESG engagement," commented one Environmental Finance Sustainable Investment Awards judge. Another applauded its "excellent transparency on engagements".