Our Policy Statement

Our Approach

We believe that consideration of material environmental, social and governance (“ESG”) factors can have an impact on long-term investment performance.

The consideration of ESG factors is a natural and important component of disciplined investment research. Proprietary research is at the core of MacKay Shield’s actively managed strategies. As part of their proprietary research, each of MacKay Shields’ actively managed strategies considers ESG risk and opportunities alongside traditional factors, consistent with our fiduciary duty to act in the best interest of our clients as we strive to meet their investment objectives.

Each investment team utilizes its own distinct philosophy, processes and expertise to add value across capital markets. As such, each investment team integrates material pecuniary ESG considerations in its own manner which reflects the character of its respective asset class and investment style.

Team-specific ESG policies, describe each team’s ESG integration process. Investment team ESG policies can be found on the Responsible Investment section of our website at www.mackayshields.com.


Investor Preferences and Screening

Each team’s integrated ESG approach can be further tailored to adhere to client-specific restrictions and needs. We discuss objectives with each of our investors and reflect client preferences within guidelines and portfolio construction. We are committed to building customized portfolio solutions, as we understand the broad array of ESG-related perspectives that investors may have.

All portfolio investments are screened against various OFAC, EU, and UN sanctions lists, as well as any countries on OFAC’s Sanctioned Countries List. Rules are coded in our trade order management systems based on these sanctioned lists to identify any potential hits and this is monitored on a pre and post trade basis.

Generally our investment teams do not apply blanket exclusionary screens on client portfolios; however, we are able to do so upon request. Additionally, we have the ability to prioritize E, S, or G factors to manage portfolios that best reflect the individual goals and preferences of our clients.


Oversight & Governance

MacKay Shields’ executive management team and its Board of Directors are responsible for oversight of the firm’s activities. To ensure consistency in investment process and outcomes, and that appropriate operational controls are in place, the firm has implemented various governance structures across the its committees and working groups.

More specifically, as it relates to ESG matters, the following committees guide our efforts:

  • The Responsible Investment Advisory Committee (“RI Committee”), which is charged with overseeing our commitment to the Principles for Responsible Investment and firmwide ESG initiatives. The RI Committee is led by our Director of ESG & Sustainability Initiatives and our General Counsel and is comprised of senior level representation from each of our portfolio management teams, as well as members of our risk and other key constituents within MacKay Shields. The RI Committee meets regularly with the following objectives:
  • Discussing current and new ways to approach and enhance ESG integration within investment teams and across the firm
  • Sharing information and ideas on ESG research, trends and developments
  • Discussing the application and viability of new and existing third party ESG products and tools to support internal efforts
  • Conducting and promoting ongoing ESG training and education. 
  • The Responsible Investment Working Group, a sub-group of the RI Committee, meets monthly and is comprised of executives,investment professionals and other staff, and led by the Director of ESG & Sustainability Initiatives. The group is tasked with reviewing whether investment teams are systematically integrating material ESG considerations into their analysis. In addition, the group is also responsible for approving updates to the firmwide ESG Policy at least on an annual basis.
  • The Enterprise Risk Oversight Committee is charged with monitoring the risks of the firm’s investment and operations activities. Its responsibilities include assisting in setting and reviewing guidelines and policies by which risk management is addressed throughout the organization. The Investment Activities Sub-Group of this Committee reviews exposures to various climate related-risks across each of the firm’s investment teams. As necessary issues are discussed with the relevant investment team and reported to the the firm’s executive management team and Board of Directors.
Climate Considerations

MacKay Shields recognizes that certain climate-related risks can have an impact on the outcome of a possible investment. We acknowledge that climate risks and opportunities may be more material for certain asset classes, sectors and/or issuers, and may present themselves over the short-, medium- and longer-term. As a fiduciary for our clients, our climate related analysis is based upon materiality of perceived risks and opportunities. Our investment teams aim to consider financially material risks, as well as ways to capture opportunities, associated with climate change in assessing investments for client portfolios.

Where feasible, we are actively taking steps to implement the recommendations of the Task Force for Climate-Related Financial Disclosures (TCFD), which includes monitoring and reporting carbon intensity within client portfolios.1


Engagement Approach

MacKay Shields believes engagement is an integral part of managing ESG risks. Our bottom-up research focused fixed income and equity investment teams engage with companies, trading partners, experts and industry peers on ESG- related matters.

We believe engagement is best conducted directly by our analysts and portfolio managers. Our bottom-up fundamental research focused investment professionals have the experience and deep knowledge to understand and address potentially material pecuniary ESG issues with issuers.

We are not activist investors, rather believe that maintaining a constructive dialogue with issuers and market participants is the best path to achieving long-term value for our clients. During our engagements with companies and issuers we express our views and any concerns with an issuer’s governance-related factors (including environmental and social issues). We aim to assess an issuer’s awareness and management of what we view to be material pecuniary ESG issues and promote better disclosure of material issues, where relevant. Feedback from our engagements are used to inform each team’s risk/reward assessment of an issuer.

Engagement activities may be prioritized based on an issuer’s weight in a portfolio or index, the possiblity of financially material ESG risk, a poor ESG score from a third party data provider, or in the case an issuer may be lagging its peers from an ESG risk perspective, among other reasons.

Each team has developed a stewardship approach which is consistent with its investment process and philosophy, which is outlined in the team’s investment policy.


Sharing Ideas and Perspectives

MacKay Shields’ is active in collaborating with clients, affiliates and other organizations throughout the asset management industry in order to promote a broader understanding and acceptance of ESG-related issues. Our professionals have contributed to PRI’s seminal fixed income paper titled “ESG Engagement for Fixed Income Investors: Managing Risks, Enhancing Returns”, are actively involved in industry working groups such as the Credit Roundtable, the ICMA Working Group for Climate Transition Finance, the CFA Institute’s Standards of Practice Council, and participate in ESG-focused investment panels and webinars.


ESG Training

In recognition that best practices in ESG integration are continuously developing, MacKay Shields’ investment professionals regularly participate in ESG-related training programs and education is continuously encouraged. Annual ESG training is mandatory for all employees. Additionally, MacKay Shields’ General Counsel, Young Lee, designed and has co-authored papers that are currently part of the CFA Level 1 and Level 2 program, and which represent the full ESG curriculum of the CFA Institute.



As part of our commitment as a PRI signatory, the firm reports on our ESG activities to the PRI on an annual basis.


An Ongoing Commitment

We are committed to strengthening and refining our ESG approach through continued dialogue with industry experts, assessing third party ESG-related analytical tools and resources and participating in ESG training. Regular meetings of the RI Committee are held to augment our ESG-related reporting and research processes and to document existing activities. 


1. The Task Force on Climate-related Financial Disclosure (TCFD) acknowledges the challenges and limitations of current carbon footprint metrics, including that such metrics should not necessarily be interpreted as risk metrics. The TCFD recognizes that some asset owners may be able to report weighted average carbon intensity for only a portion of their investments given data availability and methodological issues. Source: Implementing the Recommendations of the Task Force on Climate related Financial Disclosures, June 2017.