ESG Principles

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

Oversight & Accountability 

  • Octagon became a signatory to the Principles for Responsible Investment (PRI) in February 2020 
  • 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. The initial certification duration is September 1, 2021 through August 31, 2022, and will be reassessed annually. Conning paid for its carbon emissions assessment and carbon credits to offset the verified assessment but did 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. 

        

*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.

ESG Considerations are Integrated into 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.  Prior to our adoption of a formalized ESG review process, and given the nature of Octagon’s investment activities, we have historically considered ESG factors that pose clear risks or risk mitigants as part of the overall investment process. Our Investment Professionals are organized by sector, which we believe improves the ability to assess the materiality of ESG factors that vary in relevance by industry.  

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

Pre-Investment Screening

  • 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.

        Research & Analysis

  • Beginning in 2020, Octagon formalized processes whereby 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, and must disclose material ESG considerations in written credit memos when presenting an investment recommendation to the Investment Committee. In 2021, Octagon contracted 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.3 

Post-Investment Monitoring

  • 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.

Our ESG Initiatives Focus on Collaboration and Accountability

  • In addition to our investment activities, Octagon seeks to 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.

Engagement Efforts

  • Octagon is a member of the PRI’s Global Policy Reference Group, which seeks to strengthen public policy engagement on Responsible Investment (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. 
  1. Conning, Inc., Octagon Credit Investors, LLC, Goodwin Capital Advisers, Inc., Conning Investment Products, Inc., Conning Asset Management Limited, and Conning Asia Pacific Limited are all direct or indirect subsidiaries of Conning Holdings Limited (“CHL” or collectively, “Conning”) which is one of the family of companies owned by Cathay Financial Holding Co., Ltd., a Taiwan-based company.
  2. Conning is Octagon’s majority shareholder, investment advisory affiliate, and a PRI signatory.
  3. 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 will consolidate with the International Reporting Standards Foundation (the “IFRS® Foundation”) to form the International Sustainability Standards Board (the “ISSB”). At that time, the SASB Standards will become materials of the IFRS® Foundation.