Solution Focus
Responsible Horizons strategies aim to achieve a financial return alongside positive environmental or social outcomes, with long-term sustainability in mind.
What is Responsible Horizons?
Many investors are looking to achieve a positive environmental or social impact, and when looking at sustainable investing, are seeking businesses that will stand the test of time.
Responsible Horizons starts with a recognition that the world we live in is subject to unprecedented uncertainty due to era defining mega-issues like climate change and rising social inequality. For sustainable investing funds to achieve their objectives the underlying institutions they invest in will need to be compatible with this changing world.
Every Responsible Horizons portfolio will aim to:
- Reflect long-term sustainable themes, such as climate change and social inequality.
- New ways to invest have emerged, such as ‘use of proceeds’ bonds like green and social bonds, and focusing on comanies aligned to the UN Sustainable Development Goals.
- Emphasise the best and avoid the worst performers on environmental, social and governance (ESG) issues, based on research powered by Insight Prime.
- ESG factors can develop into material risks that undermine the value of an investment. Insight’s Prime ESG ratings are based on multiple data inputs and aim to highlight key issues for analysis and engagement.
- Avoid certain investments with a negative impact, including tobacco producers.
- Providing finance to issuers in some industries could have a negative environmental or social impact. Insight’s data, credit analysis and governance processes apply specified exclusions and thresholds to ensure its strategies avoid such sectors.
- Apply a higher hurdle for environmentally sensitive industries, like energy companies.
- Climate change is an urgent priority, and so Insight pay close attention to companies with greater potential for an environmental impact. They seek to exclude companies with significant exposure to coal and unconventional oil and gas, and companies with worst-in-class carbon intensity.
- Provide transparency on ESG metrics
- Demonstrating the application of responsible investment principles is a key priority for our clients. Insight has developed in-depth reporting to offer transparency on various metrics, including TCFD measures, impact indicators and social metrics.
Combining all these elements, we believe these principles mean Responsible Horizons can help align investments to client’s values, as well as offer the potential for an attractive return.
Prime: the ESG data behind Responsible Horizons
Prime is Insight Investment’s proprietary environmental, social and governance (ESG) rating system, which uses extensive global data and in-depth analysis to highlight key ESG risks.
Insight’s portfolio managers and analysts use Prime to support their investment decisions, inform their engagement with companies.
Insight’s proprietary Prime ESG ratings focuses on how ESG risks might affect the credit worthiness of debt issuers.
The ratings are grouped into four areas:
- Prime corporate ESG ratings:: This covers investment grade, high yield and emerging market issuers.
- Prime climate risk ratings: This covers a large number of companies, and rates issuers by both their physical and transition risks with regard to climate change.
- Prime sovereign risk and impact ratings: These cover countries’ sustainability performance, with separate ratings seeking to highlight their ESG risks and their alignment with the UN Sustainable Development Goals.
- Prime net-zero alignment framework: This covers a large number of issuers of which each are categorised as aligned, aligning, committed or not committed.
Furthermore, Insight engages in proactive engagement on ESG issues as they believe exclusions alone are not necessarily enough to pursue the best possible outcomes for investors. This drives them to focus on engagement with issuers, either through direct dialogue, group meetings, collaborative initiatives or via their counterparties.
Insight’s three reasons for engagement with issuers:
- To manage and understand ESG risks.
- To hold issuers to account.
- To achieve positive change.
ABOUT INSIGHT
About Insight Investment
Insight Investment is one of the world’s largest investment managers, with extensive expertise in risk management, fixed income and absolute return strategies.
Why Insight?
A founding signatory to the UN-supported Principles for Responsible Investment (PRI) in 2006, Insight has long believed that ESG factors can affect the value of investments.
Responsible Horizons aims to build on Insight’s evidence-based approach to both investment research and ESG analysis, supported by ESG ratings from Insight’s proprietary model Prime, to offer leading solutions for investors seeking to express their values as they pursue attractive returns.
Solution Focus
Responsible Horizons strategies aim to achieve a financial return alongside positive environmental or social outcomes, with long-term sustainability in mind.
Scale
Insight manages over €764.2bn1 in assets under management.
Expertise
A dedicated Responsible Investment Team of specialists supports Insight’s investment professionals in their pursuit of a responsible approach to investment.
Innovation
Insight has developed cutting-edge proprietary tools to help assess corporate and sovereign ESG risks, corporate climate risks, and impact bonds.
Experience
In 2023, the majority of the over 980 engagements conducted by Insight’s research analysts with debt issuers included some form of ESG dialogue and within these engagements, Insight completed over 140 dedicated ESG deep-dive engagements.
Scale
Expertise
Innovation
Experience
Solution Focus
1 Source: Insight, as at 31 March 2024. Assets under management (AUM) are represented by the value of cash securities and other economic exposure managed for clients. Figures shown in EUR. FX rates as per WM Reuters 4pm spot rates. Reflects the AUM of Insight, the corporate brand for certain companies operated by Insight Investment Management Limited (IIML). Insight includes, among others, Insight Investment Management (Global) Limited (IIMG), Insight Investment International Limited (IIIL), Insight Investment Management (Europe) Limited (IIMEL) and Insight North America LLC (INA), each of which provides asset management services.
Find out more about our Investment Approach:
Insight outlines the investment approach common to the Responsible Horizons strategies in four simple steps:
Optimising the universe
The investment universe is adjusted by excluding:
- All issuers with a worst-in-class Prime ESG rating or no Prime ESG rating, and all corporate issuers with a worst-in-class Prime climate risk rating
- All companies in breach of widely accepted global conventions such as the UN Global Compact principles.
- All companies materially involved in the following socially sensitive industries: adult entertainment, cannabis.
- production, controversial weapons, gambling and tobacco production
- All companies with over 5% of revenues from coal mining and power generation, or unconventional oil and gas.
- extraction, and utilities with over 30% coal in in their fuel mix – unless the exposure is achieved via a green bond that passes Insight’s assessment framework for such issuance, or Insight believes the issuer has a clearly defined, long-term plan to address its environmental impact.
- All companies with worst-in-class carbon intensity (over 2,000 tonnes per US$1 million sales)
- Impact bonds rated ‘red’ by Insight’s impact bond assessment.
- Issuers that fail a Principal Adverse Impacts (PAI) screen – unless alternative mitigating action is deemed appropriate
- When a holding moves outside these restrictions, a strategy’s portfolio managers will make reasonable endeavours to remove the position within a defined timescale.2
In some circumstances, where strategies move outside of the exclusionary criteria set, there may be an extended resolution period to enable engagement with the issuer with the aim of seeking to resolve the issue identified prior to divestment. It is therefore possible that a strategy may, at times, hold positions outside the parameters set above.
Conducting in-depth research
Insight’s portfolio managers and analysts conduct in-depth research and follow well-established investment processes to identify key risks and opportunities within their target markets.
Engaging with issuers
Insight engage with entities to improve our understanding and to support our analysis and identification of risks that could be financially material. Insight may also engage to influence issuers on specific topics, and this could include encouraging them to improve their practices in defined areas, such as disclosures and governance.
Insight may also engage when specific sustainability thresholds are breached. For example, when a holding’s Prime ESG rating deteriorates to the worst possible rating, meaning it could be excluded from investment, Insight will consider whether to continue to hold the position and, if so, will seek to engage with the issuer with a view to influencing their future behaviour. If the issuer does not take reasonable steps to address the issue, a strategy’s portfolio managers will make reasonable endeavours to remove the position within 12 months.
More information on engagement is detailed in Insight’s Stewardship Policy, available here .
Making a positive allocation
Each strategy will endeavour to hold at least 10% of its portfolio in sustainable investments3.
Responsible Horizons Euro Impact Bond Fund
Fund Managers: Fabien Collado and Lutz Engberding
Responsible Horizons Euro Corporate Bond Fund
Fund Managers: Fabien Collado and Lutz Engberding
Responsible Horizons Euro Impact Bond Fund
Investment Objective:
To achieve positive environmental and/or social impacts while generating a total return comprised of income and capital growth by investing in a broad range of Euro-denominated debt and debt- related securities and related financial derivative instruments ("FDI").
Benchmark: The Fund will measure its performance against the Bloomberg MSCI Euro Corporate Green Bond TR Index, (the “Benchmark”). The Fund is actively managed, which means the Investment Manager has discretion to invest outside the Benchmark subject to the investment objective and policy. However, as the Benchmark covers a significant proportion of the investable universe, the majority of the Fund’s holdings will be constituents of the Benchmark and the weightings in the portfolio may be similar to those of the Benchmark. The investment strategy will restrict the extent to which the portfolio holdings may deviate from the Benchmark and consequently the extent to which the Fund can outperform the Benchmark.
Responsible Horizons Euro Corporate Bond Fund
Investment Objective:
To generate a total return comprised of income and capital growth by investing primarily in a broad range of Euro-denominated debt and debt-related securities and related financial derivative instruments, whilst taking environmental, social and governance ("ESG") factors into account.
Benchmark: The Fund will measure its performance against the Bloomberg Euro Aggregate Corporate Total Return Index (the “Benchmark”).
The Fund is actively managed, which means the Investment Manager has discretion to invest outside the Benchmark subject to the investment objective and policy. However, as the Benchmark covers a significant proportion of the investable universe, the majority of the Fund’s holdings will be constituents of the Benchmark and the weightings in the portfolio may be similar to those of the Benchmark. The investment strategy will restrict the extent to which the portfolio holdings may deviate from the Benchmark and consequently the extent to which the Fund can outperform the Benchmark.
Responsible Horizons EM Debt Impact Fund
Investment Objective:
To achieve positive environmental and/or social impacts while generating a total return comprised of income and capital growth by investing in emerging market debt and debt-related securities and related FDI.
Benchmark: The Fund will measure its performance against the JP Morgan EM Green, Social and Sustainable Bond Index Diversified, WITH J.P. Morgan EM Credit Green, Social and Sustainability Bond Diversified Index (USD Hedged), (the “Benchmark”) for comparison purposes. However, the Investment Manager does not seek to align the Fund’s performance with that of the Benchmark and the performance of the Fund and the Benchmark may differ significantly.
The Fund is actively managed, which means the Investment Manager has discretion to invest outside the Benchmark subject to the investment objective and policy. The Fund has an unconstrained investment style, and as such it will not take the Benchmark into account when selecting the Fund’s Investments.
Investment Risks
The value of investments can fall. Investors may not get back the amount invested. Income from investments may vary and is not guaranteed.
Objective/Performance Risk: There is no guarantee that the Fund will achieve its objectives.
Environmental, Social and Governance (ESG) Investment Approach Risk: This Fund can be considered to follow an ESG investment approach or incorporate elements of an ESG investment approach, which may cause it to perform differently than other funds that have a similar objective but which do not integrate an ESG investment approach (or elements thereof) when selecting securities. In addition, in following an ESG investment approach, the Fund is dependent upon information and data from third parties (which may include providers for research reports, screenings, ratings and/or analysis such as index providers and consultants). Such information or data may be incomplete, inaccurate or inconsistent.
A complete description of risk factors is set out in the Prospectus in the section entitled "Risk Factors".
Meet the Insight team
Insight embeds ESG risk analysis across its investment processes: every portfolio manager and analyst is expected to take ESG factors into account where they are material and relevant to the investments they oversee.
Adrian Grey
Global Chief Investment Officer
Robert Sawbridge
Head of Responsible Investment
Fabien Collado
ESG Portfolio Manager
Lucy Speake
Co-Head of Fixed Income
Underpinned by Insight’s precise and evidence-based approach, Responsible Horizons emphasises both in-depth investment research and active engagement to understand risks and improve behaviour.
Robert Sawbridge, Head of Responsible Investment
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Insight Investment senior portfolio manager Damien Hill weighs up the UK, European and US credit markets, highlighting where he sees pockets of value.
Insight Investment senior high yield portfolio manager Uli Gerhard outlines why he thinks there are opportunities to be found in the high yield market.
Insight Investment senior high yield portfolio manager Uli Gerhard outlines some of the factors to consider when aiming to reduce risk when investing in high yield.
Newton Real Return portfolio managers Aron Pataki and Lars Middleton think the current environment requires their best team of attacking and defensive assets.
Why market regime change presents both threats and opportunities to fixed income investors.
Why rising yields, growing income opportunity and an increasingly supportive market environment could boost global credit markets.
Why growing central bank divergence and market volatility could open a raft of new opportunities for active fixed income investors.
At the end of Q1 the BNY Mellon Global Short-Dated High Yield Bond Fund had a yield to worst of around 7.15% in USD , which Insight views as attractive.
Rising yields and improving credit quality may present investors with some compelling reasons to consider short-dated high yield debt.
Why generationally high yield levels in the US municipal bond sector are proving increasingly attractive to global investors.
Adam Whiteley, head of global credit at Insight Investment, reflects on the shifting world of fixed income investment, geopolitical change and the challenges and rewards presented by a career in portfolio management.
As central banks work to tackle inflation just how healthy are the prospects for European credit markets?
Economists and portfolio managers from BNY Mellon Investment Management share ‘pivotal moments’ of recent years and how they have influenced macroeconomic and market trends
Emerging market impact bonds look set for major growth and could bring a range of positive outcomes for EM countries.
Why the return of sustained inflationary pressures and higher interest rates has buoyed credit markets in sectors such as investment grade.
BNY Mellon Investment Management chief economist Shamik Dhar looks at key macroeconomic drivers which could buoy fixed income markets in the years ahead.
Can fixed income investors benefit from credit market normalisation and heightened volatility?
Why elevated bond yield levels could augur well for fixed income investors in 2024 despite heightened market volatility.
Why global credit is looking potentially more attractive to some investors now than at any stage over the last 15 years.
After a rough year for global bond markets – one of the worst in recent history – has value returned to the asset class? Managers across Newton and Insight along with BNY Mellon IM’s economist team outline their views.
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2 The Responsible Horizons Multi-Sector Credit strategy aims to hold at least 10% of its portfolio in green or other impact bonds, or ‘positive impact issuer’ bonds (bonds issued by companies with a high level of alignment to the UN Sustainable Development Goals).
3 As at 31 December 2023.
Please refer to the prospectus and the KID before making any investment decisions. Documents are available in English and an official language of the jurisdictions in which the Fund is registered for public sale. Go to www.bnymellonim.com.
Investment Managers are appointed by BNY Mellon Investment Management EMEA Limited (BNYMIM EMEA), BNY Mellon Fund Managers Limited (BNYMFM), BNY Mellon Fund Management (Luxembourg) S.A. (BNY MFML) or affiliated fund operating companies to undertake portfolio management activities in relation to contracts for products and services entered into by clients with BNYMIM EMEA, BNY MFML or the BNY Mellon funds.
The value of investments can fall. Investors may not get back the amount invested. Income from investments may vary and is not guaranteed.
Insight Investment uses impact bonds as an umbrella term for fixed income issuances the proceeds of which are dedicated solely to projects intended to meet environmental or social criteria. This encompasses the universe of bonds referred to as green or sustainable as well as more specific outcome-oriented issuances such as blue, gender and transition bonds.
Important information
*Investment Managers are appointed by BNY Mellon Investment Management EMEA Limited (BNYMIM EMEA), BNY Mellon Fund Managers Limited (BNYMFM), BNY Mellon Fund Management (Luxembourg) S.A. (BNY MFML) or affiliated fund operating companies to undertake portfolio management activities in relation to contracts for products and services entered into by clients with BNYMIM EMEA, BNY MFML or the BNY Mellon funds.
1888637 Exp: 1 December 2024