ESG playbook for bond investors needs a rewrite

NOT to be left out of the ESG (environmental, social, and governance) gold rush, a growing number of bond firms now offer environmental, social and governance funds. ESG integration has become a standard box to be checked (or not) on bond clients' Requests for Proposals. Investment banks have created tools to help fixed income managers ESG-ify their portfolios.

Yet, the structure of the corporate bond market and the nature of creditors' relationships with managements suggest that the ESG playbook needs a rewrite if bondholders want to make a difference in corporate behaviour.

For the avoidance of doubt, I believe that good E, S and G practices can correspond with superior returns. As the co-author of a book about the importance of gender diversity in investment management and a shareholder and employee of a majority women-owned firm, I am an observably passionate "S" and "G" advocate.