AMWatch

Credit market throws weight behind shareholder ESG activism

Bond investors are joining equity buyers in an ESG pincer movement that’s pressuring companies with lackluster standards to up their game.

Photo: PR / BLOOMBERG

Participants in the USD 40 trillion global credit market are using roadshows, industry groups and divestments to press issuers over environmental, social and governance concerns, such as pollution or management oversight. That extra focus and financial muscle is amplifying efforts in equity markets, the traditional front-line of investor activism.

"There’s more and more enthusiasm on the credit side," said Chris Kaminker, head of sustainable investment research and strategy at Lombard Odier Investment Managers, which oversees 59 billion Swiss francs (USD 66 billion). "Bondholders are very powerful: companies don’t go bankrupt as the stock price falls, but when they cannot refinance or when the cost of capital gets too high," the former SEB sustainability specialist says.

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