Around The Horn ESG INVESTING Michael McLaughlin, CFA AAM - PowerPoint PPT Presentation

Around The Horn ESG INVESTING Michael McLaughlin, CFA AAM Portfolio Manager

Credit Analysis: Incorporating ESG Into Our Process ESG risks are important to ESG considerations are consider when assessing explicitly factored into our future cash flows as well as methodology when assigning the probability of default and internal ratings recoveries We highlight ESG issues that ESG considerations are rarely are material to our risk the main driver of credit assessment in our research outcomes but have resulted in and related communication material rating differences (AAM vs. rating agency) 1

Credit Analysis: Incorporating ESG Into Our Process Examples of sectors and credits where ESG drivers affected AAM’s risk assessment: Environmental – Pollution, Regulations, Policies • Refining, Autos Social – Health and Safety • Chemicals (Sherwin Williams) Governance • Board oversight, composition, practices – Petrobras, CBS/Viacom/Redstone family • Executive – quality, compensation, accountability, incentives – Community banks Bloomberg ESG portal (June 2018) • Risk Management - Cyber security (Equifax) 2