Franklin Templeton has been awarded a LuxFLAG ESG label for its Franklin Green Target Income 2024 fund, which launched in May this year.
The fund targets higher yielding corporate debt securities denominated in euros and issued globally, including in emerging markets. The management is led by David Zahn, head of European Fixed Income, and Rod MacPhee, vice president and portfolio manager from the Franklin Templeton Fixed Income Group. They believe that companies in the high yield space may not be prioritising ESG risks in the same way that investment grade companies might, and will be pursuing an engagement policy with companies on how to manage those risks, including the areas of operational management, efficiency strategy and accountability for environmental key performance indicators.
Zahn said: "We are delighted to have been granted the use of the ESG label from LuxFLAG, which is known for its high standards and rigorous assessment of funds' investment policies. This label further validates our approach of applying an ESG focus to high-yield assets, which we believe is not common in this market."
"In addition to company specific engagement, we believe there is value in assessing how our portfolio level exposure to water and carbon emissions risks will evolve over the five-year life of the fund. We have seen a material increase in climate-change laws in the last decade, and as investment managers, we think it's crucial that we look at how the companies in our portfolios are addressing these risks. We want to give our clients the opportunity to support and invest in these relevant companies."