Inherent PM Nikhil Mirchandani on ESG and Credit

Asked by Bloomberg Markets what will be the next big ESG issue, Inherent Group PM Nikhil Mirchandani suggested: “While incorporating ESG into public and private equity investing has gained considerable momentum, we expect to see it adopted more broadly in public credit investing next year. We believe otherwise diligent and thoughtful credit investors often omit or give cursory consideration to ESG factors. In so doing, they miss leveraging one of the most insightful analytical tools available. Indeed, a considerable and rapidly growing body of studies by both academic and Wall Street sources supports the view that companies that outperform on ESG issues tend to outperform as credit investments over time. The recent growth of the sustainability, or green, bond market has begun to buttress the findings of these backward-looking studies with real-time evidence. In two highly visible cases, large issuers such as Google and Visa broke records for low all-in issuance yields in August this year by linking debt issuance to environmentally friendly projects.”