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ESG engagement case study: assessing Huawei risk

12/10/2020

The M&G Global High Yield ESG Bond Fund combines M&G’s long-running expertise in credit analysis with a rigorous assessment of environmental, social and governance (ESG) factors. Through a series of case studies, we take a closer look at how ESG factors are incorporated into our credit research process to help achieve a more comprehensive understanding of the companies in which we invest.

In this piece we take a look at the growing pressure faced by Chinese telecommunications equipment supplier Huawei and the impact this could have across the wider telecom sector.

Key points:

  • With increasing concerns around the viability of Huawei as a supplier of telecom equipment, M&G senior credit analyst Simon Duff has launched an in-depth review across the telecom sector.
  • Through an active engagement process, we have sought to establish the extent of each company’s exposure to Huawei and the potential costs associated with replacing existing equipment.
  • By combining detailed credit analysis with active company engagement, we have been able to gain a clearer picture of the Huawei-related risks for the sector and some of our portfolio holdings.

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