Responsible investing is an approach that considers environmental, social and governance (ESG) factors alongside traditional financial analysis. Investors may use responsible investment approaches to better understand long-term risks and opportunities while pursuing their financial objectives.
Responsible Horizons FAQ
Core capabilities: Responsible Horizons
Frequently asked questions
The Responsible Horizons strategies bring together Insight’s fixed-income expertise and responsible-investment capabilities. The range is designed for investors seeking portfolios that align with both financial objectives and defined sustainability goals, rather than treating responsible investment as a separate consideration from credit analysis and portfolio construction.
The range includes corporate bond, multi-sector credit, buy-and-maintain and impact bond strategies. This allows investors to pursue different investment objectives while applying explicit responsible-investment criteria appropriate to the relevant market and strategy.
The Responsible Horizons strategy range aims to help investors achieve two key goals: an investment portfolio that aligns with both future financial targets and sustainability goals. The five criteria for a Responsible Horizons strategy are as follows:
- Emphasise the best and avoid the worst on ESG issues
- Reflect long-term themes
- Avoid investments with negative impact
- Apply a higher hurdle for environmentally sensitive industries
- Provide transparency on ESG metrics
Several strategies in the range incorporate net-zero-related characteristics, including minimum allocations to companies at least committed to net zero and carbon-intensity thresholds that decline over time.
The exact criteria vary, so investors should refer to the relevant strategy documents when assessing whether a portfolio meets their requirements.
Insight seeks to help our clients achieve their desired outcomes and to reflect their priorities. This lies at the heart of our approach to responsible investment.
We assess and identify, and take responsibility for managing, factors we deem to be financially material (including, but not limited to, sustainability and governance factors) whilst also reflecting client sustainability preferences.
Financially material sustainability risks can be ‘direct’ in that they are identifiable, can be more straightforward to quantify, and typically occur over the nearer term, such as pollution fines or product safety issues. They can also be ‘indirect’ and may have multiple pathways to financial relevance; quantification is more complex as they typically stem from broader issues that impact the whole economy over the long term. Examples are extreme heat and water scarcity.
For clients who wish to apply specific criteria to their mandates to help target sustainability outcomes, we have developed sustainable investing strategies to enable them to do so.
Learn more about our approach on our Investing Responsibly page.
Insight considers sustainability and governance factors where it believes they are financially material. Where relevant, we will also seek to reflect clients’ sustainability preferences. These factors are assessed alongside conventional credit risks rather than through a separate process.
The analysis is supported by Insight’s proprietary Prime ratings, covering corporate sustainability, physical and transition climate risks, and alignment with net-zero pathways. The Prime frameworks cover a wide range of corporate and sovereign issuers, and look to help analysts and portfolio managers in their approach to security selection and portfolio construction, where appropriate and relevant for the specific strategy.
Where appropriate, Insight may engage with issuers to understand and manage sustainability risks and hold management teams to account. Engagement may take place directly, through group meetings and collaborative initiatives, or via market counterparties.
Restrictions and engagement can therefore perform complementary roles. A strategy may avoid issuers that fail to meet its minimum requirements while using engagement where continued dialogue could help manage risk. Engagement does not guarantee that an issuer will change, and any response to a lack of progress will depend on the relevant strategy’s criteria.