Octagon believes the integration of environmental, social, and corporate governance (ESG) risk factors enhances the research process and better allows us to adhere to the fiduciary duty we owe each client. As a signatory of the Principles for Responsible Investment (PRI), we are committed to upholding the PRI's six principles. 

Principles for Responsible Investment

Our ESG Initiatives Focus on Integration, Collaboration and Accountability

Octagon seeks to integrate ESG factors into the investment process and incorporate effective ESG practices into our own operations. We are committed to promoting an organizational culture that demands ethical conduct and compliance with the law. As it befits Octagon’s collaborative culture, we are committed to promoting ESG and socially responsible behavior across the organization, providing adequate employee training to reinforce best practices, and actively soliciting feedback from Octagon personnel and our affiliates in an ongoing effort to improve our existing framework.

ESG Integration in our Investment Process

We believe analyzing ESG factors can enhance our ability to assess a borrower’s creditworthiness, and thus we have integrated ESG considerations into our credit research and risk monitoring processes. 

Please note that while certain funds or separate accounts adhere to specific ESG-related restrictions, Octagon does not represent any Funds or services as “ESG Compliant”, “Green,” or otherwise designed or managed to promote ESG and sustainability initiatives or meeting any ESG-related regulatory standards. Certain legacy and new investments are not subject to a formal ESG review process. Accordingly, portfolios managed by Octagon hold positions that have not been subject to any ESG-focused evaluation. 

  • Octagon does not generally negatively screen investment opportunities, however, we adhere to exclusion criteria for some funds, and for certain separate accounts at the request of the underlying client.
  • As per Octagon’s ESG Policy, Investment Research Professionals utilize various information sources to evaluate ESG considerations as part of their credit diligence process for most new loan and bond purchases. Octagon's Investment Research Professionals must disclose material ESG considerations in written credit memos when presenting an investment recommendation to the Investment Committee. Octagon contracts with the Value Reporting Foundation to license and use the SASB Standards Disclosure Topics to help standardize the diligence process when evaluating financially material ESG considerations for issuers across different sectors.1 
  • Post-investment, Octagon’s Investment Professionals continuously monitor ESG factors within their issuer universe, and proactively alert the Investment Committee to any significant ESG-related developments or concerns for further scrutiny.
  • As it relates to investments in CLO debt and equity tranches managed by third-party investment managers, Octagon’s CLO Investment Team assesses each manager’s approach to ESG as part of the manager’s investment process by reviewing and analyzing the ESG Diligence Materials as part of our CLO Investment Team’s pre-investment and monitoring (post-investment) process.

1. In October 2021, Octagon contracted with the Value Reporting Foundation (the “VRF”) to license and use the Sustainability Accounting Standards Board (“SASB”) Disclosure Topics to help standardize the diligence process when evaluating ESG considerations for issuers across different industries and sectors. Effective August 1, 2022, the VRF consolidated with the International Financial Reporting Standards Foundation (the “IFRS® Foundation”) to form the International Sustainability Standards Board (the “ISSB”). At that time, the SASB Standards became materials of the IFRS® Foundation.

Stewardship and Engagement Efforts

Octagon strives to contribute to the broad improvement of responsible investment (RI) practices by working with our investors in support of their own ESG-driven initiatives and reporting requirements, engaging with management teams to enhance our Investment Team’s ability to analyze ESG risks and opportunities presented by the issuers in which we invest, encouraging such issuers to improve their ESG risk management, be more transparent, and develop more sustainable business practices, and actively participating in industry-wide efforts to promote ESG and RI across the loan and CLO markets. We believe good stewardship, founded upon a sound governance and risk framework, and supported by active engagement with corporate borrowers and third-party CLO managers (as applicable), and in some instances policymaker engagement, is key to delivering on those responsibilities. 

Click here to read Octagon’s Stewardship and Engagement Policy

  • Octagon is a member of the PRI’s Global Policy Reference Group, which seeks to strengthen public policy engagement on RI topics and encourage greater alignment between RI commitments and public policy efforts.
  • Octagon is a member of the Loan Syndications and Trading Association’s (LSTA) ESG Committee, comprised of LSTA members and buy-side participants in the loan market.
  • As an affiliate of Conning,2 Octagon participates in various initiatives to share ESG-related knowledge and best practices across the CHL1 organization. 

When in the best interest of Octagon or our clients, we will seek to engage in formal collaborative engagements, such as the following initiatives prompted by the PRI:

  • Octagon Endorses PRI-Coordinated Statement on ESG in Credit Risk and Ratings
    • The PRI has been working with investors and credit rating agencies (CRAs) through the ESG in Credit Risk and Ratings Initiative to promote a more systematic and transparent incorporation of ESG factors in credit risk assessments since 2016 and commenced the second phase in 2020. As of December 31 2022, Octagon is one of 183 investors with over US$40 trillion of assets under management (AUM) and 28 CRAs that support this initiative. Click here to learn more
  • Octagon is one of 65 organizations to endorse the statement, which was developed jointly by the World Business Council for Sustainable Development (WBCSD), the Principles for Responsible Investment (PRI), and the International Federation of Accountants (IFAC).
  • Octagon is one of 93 organizations to sign the joint letter by Eurosif - The European Sustainable Investment Forum, EFAMA, Institutional Investors Group on Climate Change (IIGCC), Principles for Responsible Investment, and United Nations Environment Programme Finance Initiative (UNEP FI), calling on the European Commission to uphold the ambition and integrity of the first set of European Sustainability Reporting Standards (ESRS).

2. Conning, Inc., Octagon Credit Investors, LLC, Global Evolution Holding ApS and its group of companies (“Global Evolution”), Goodwin Capital Advisers, Inc., Pearlmark Real Estate, LLC, Conning Investment Products, Inc., Conning Asset Management Limited, and Conning Asia Pacific Limited are all direct or indirect subsidiaries of Conning Holdings Limited (collectively, “Conning”) which is one of the family of companies owned by Cathay Financial Holding Co., Ltd., a Taiwan-based company. 
3. Conning is Octagon’s majority shareholder, investment advisory affiliate, and a PRI signatory.

Oversight and Accountability 

  • Octagon’s ESG Committee is responsible for overseeing the implementation of the Firm’s ESG policy and for evaluating the Firm’s progress with respect to ESG matters. 
  • Octagon’s ESG Committee is comprised of senior members of the Investment, Compliance & Investor Relations Teams.  Sean Gleason (Portfolio Manager) and Erin Crawford (Managing Director, Investor Relations) are ESG Committee Co-Chairs. 
  • Andrew Gordon (CEO) and Sean Gleason serve on the CHL Sustainability Leadership Group, which was formed to deliver “top-down” consistency, governance and leadership on ESG-related issues and climate-risk efforts across CHL operations (including Octagon and other Conning affiliates).1

CarbonNeutral® Company Certification

In 2021, Conning Holdings Limited and its subsidiaries* (together, “Conning”) achieved CarbonNeutral® company certification indicating that the firm’s net greenhouse gas emissions are zero for a defined duration. Conning was certified carbon neutral through the use of high-quality instruments, in accordance with The CarbonNeutral Protocol and the GHG Protocol Scope 2 Guidance. All carbon credits adhere to standards approved by the International Carbon Reduction and Offset Alliance (ICROA). To achieve this certification, Conning is working with leading experts on carbon neutrality and climate finance, Natural Capital Partners. As part of this certification, the firm’s global operations completed an independent assessment of their greenhouse gas emissions. Conning has been certified as carbon neutral across its operations since September 1, 2020. Conning pays for its annual emissions assessment and the carbon credits to offset the verified assessment but does not pay directly for the certification.

At this time, to meet its carbon neutral goal, Conning has established an offsetting program that finances several projects that support the transition to a low carbon global economy. All projects are independently verified to assure emissions reductions are occurring. The deployment of carbon credits is the first step in a journey as the firm continues to examine how to reduce its carbon footprint. 

 Certified Carbon Neutral

*Octagon Credit Investors, LLC, Conning, Inc., Goodwin Capital Advisers, Inc., Conning Investment Products, Inc., Conning Asset Management Limited, Conning Asia Pacific Limited, and Global Evolution Holding ApS and its group of companies (“Global Evolution”) are all direct or indirect subsidiaries of Conning Holdings Limited (collectively, “Conning”) which is one of the family of companies owned by Cathay Financial Holding Co., Ltd., a Taiwan-based company. The CarbonNeutral® Company Certification does not reference portfolio investments held in Octagon client accounts.