How Do ESG Factors Impact Fixed Income Investing?

Mitch Reznick, co-head of credit at Hermes Investment Management discusses their white paper titled Pricing ESG risks in credit markets, in Morningstar. Reznick and Viehs explore the relationship between quantitative ESG scores and credit default swaps and determine that while credit risk is still the main driver of CDS spreads, good ESG practices also have a risk reduction effect on companies.