GSAM launches GS Global ESG Enhanced Income Bond Portfolio

Goldman Sachs Asset Management has launched the GS Global ESG Enhanced Income Bond Portfolio.

The fund is managed by GSAM’s Global Fixed Income team, which manages over USD700 billion, and seeks to provide investors with access to the broad global fixed income opportunity set, including corporate bonds, securitised credit and emerging market debt, and deliver high income and long-term capital appreciation.

Bonds held in the portfolio are identified through rigorous fundamental research that integrates ESG analysis.

First, the Global Fixed Income team implements sector and company exclusions based on established ESG standards. This involves omitting sectors such as tobacco and other business models that are inconsistent with widely-accepted norms and values, including companies that violate the United Nations Global Compact principles.

The team then conducts an analysis of individual company revenue streams to screen for negative social and environmental factors. For example, a Utility company would be excluded if more than a quarter of its revenue is derived from thermal coal generation, an activity that is one of the largest contributors to global carbon emissions.

Finally, the investment universe is scrutinised based on proprietary ESG scores, with bonds from the lowest scoring issuers eliminated.

“The GS Global ESG Enhanced Income Bond Portfolio makes a conscious effort to avoid companies that in our view exhibit weak ESG profiles. We believe this approach can contribute to long-term performance,” says Jonathon Orr, Global Fixed Income Portfolio Manager.

“The Covid-19 pandemic has amplified investor focus on environmental, social and governance risks. Our commitment to ESG remains resolute. We believe the GS Global ESG Enhanced Income Bond Portfolio meets a deepening need within the investment world to achieve investment objectives with thoughtful consideration of ESG factors,” adds Kathleen Hughes, managing director, GSAM client business.

“We believe ESG analysis is critical for identifying 21st century business risks and ESG integration is therefore our fiduciary duty as an active asset manager. ESG is the responsibility of all investment professionals, not just those with ESG in their title,” says Ashish Shah, co-chief investment officer of Global Fixed Income.

The fund, which is a new sub-fund of the UCITS-qualifying, Luxembourg-domiciled Goldman Sachs Funds SICAV, is available to both institutional and retail clients across Europe.