ESG Questionnaire Response - Pacific Investment Management Company LLC (PIMCO)

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Report date: July 21, 2021

UNPRI Transparency Report

 PIMCO's full response
(PDF, 21.9 MB)

ESG Policies

1. Please provide your ESG-related policies.

Please note, the PIMCO Canada Canadian CorePLUS Bond Trust does not have an explicit environmental, social and governance (“ESG”) investment objective.

At the firm level, PIMCO incorporates material ESG factors into the investment research process to better assess issuer risks as part of our ESG integration process, which encompasses all of our assets under management. 

At PIMCO, we define ESG Integration as the systematic integration of material ESG factors into investment research to enhance our client’s risk-adjusted returns. We believe incorporating these non-financial factors should be part of a robust investment process. We recognize that ESG factors are increasingly material inputs into our understanding of global economies, markets, industries and business models. Whether climate change, income inequality, shifting consumer preferences, regulatory risks, talent management or unethical conduct, ESG factors are important considerations when evaluating long-term investment opportunities. These factors are relevant for all asset classes, spanning public and private markets. Our commitment to ESG integration is what led PIMCO to become a signatory to the UN Principles of Responsible Investment (PRI) in September 2011; importantly our approach to ESG integration encompasses all assets managed by PIMCO, inclusive of both ESGdedicated and non-ESG mandates.

Integrating material ESG factors into the evaluation process does not mean that ESG information is the sole consideration for an investment decision; instead, PIMCO’s portfolio managers and analyst teams evaluate a variety of financial and non-financial factors, which can include ESG considerations, to make investment decisions. By integrating material ESG factors into the evaluation process, PIMCO is increasing the total amount of information assessed to generate a more holistic view of an investment, in efforts to deliver the best performance outcomes for our clients.

PIMCO ESG Investment Policy Statement

PIMCO has a published ESG Investment Policy Statement that details PIMCO’s commitments to: the integration of ESG factors into our broad research process, sustainable investment solutions offered to our clients, our engagement with issuers on sustainability factors, and our climate change investment analysis.

This statement is designed to apply broadly to our firm’s long-term investment process and to our dedicated ESG investment solutions.

PIMCO’s ESG Policy is reviewed at least annually by the ESG Leadership team who helps govern PIMCO’s ESG capabilities and platform.

The policy statement is publicly available on PIMCO’s website via the following link: PIMCO ESG Investment Policy.

2. Are sustainable investing and ESG factors integrated into your investment process and portfolio management decisions? If yes, please provide details.

Please note the PIMCO Canada Canadian CorePLUS Bond Trust is not a dedicated ESG labeled fund, but rather integrates material ESG factors into the broad research process across fixed income assets. 

At the firm level, PIMCO incorporates material ESG factors into the investment research process to better assess issuer risks. Our process emphasizes rigorous analysis of broad secular trends, which are at the core of both global ESG trends and long-term asset returns. PIMCO has developed a robust platform specialized in supporting ESG-focused investment solutions based on our belief that ESG integration is essential to optimizing risk-adjusted returns over the long-term. For this reason, our investment process evaluates ESG risk factors from both the top-down (i.e. macro) and bottom-up (i.e. security specific) in a process that encompasses all of our assets under management.

From the top-down, the first and most important step in PIMCO’s process is to correctly identify the major longterm themes that will impact the global economy and financial markets. PIMCO believes that such analysis is fundamental to making sound investment decisions. The firm’s annual Secular Forums are devoted to identifying and analysing these longer-term trends and the analysis of ESG-related issues fits directly into that process.

As illustrated below, PIMCO blends its macro analysis with detailed bottom-up work.

The firm’s global research teams aim to evaluate ESG-related issues as part of their bottom-up analysis.

PIMCO aims to consider all potential risks and opportunities that could affect particular issuers or industries, including those that are ESG-related. To facilitate the systematic integration of ESG risk factors in our analysis and help to monitor ESG related risks, we are continually enhancing our proprietary research with specific ESG related attributes and dedicated scoring. In addition, we have hosted training sessions for our analysts on available scoring methodologies, ESG systems, data and tools.

ESG data and analysis, both internal and external, are readily available to all portfolio managers, traders and research analysts across the firm which allows portfolio managers to make trading decisions which fully reflect the ESG risks of a given issuer.

3.a. Are you a signatory to the UNPRI?

Yes. We believe that the UNPRI is a leading force in the Environmental Social and Governance (“ESG”) conversation within the investment management industry. Based on our assessment of this organization and their standing within the industry, we became a UNPRI signatory in September 2011. As a UNPRI signatory, we participate in the annual UNPRI questionnaire on the implementation of the six principles. PIMCO’s answers to this questionnaire are publicly available.

Reflecting the depth and breadth of our ESG integration as a firm, in 2020 PIMCO received an A+ rating (highest score) from our UN PRI Assessment Report, which is the third consecutive year receiving an A+ rating. We now score A+ across every single indicator, highlighting our evolution and strong improvement in sustainable investing. PIMCO’s 2020 scores are provided below.

Category PIMCO's Score Median Score
Strategy & Governance A+ A
Fixed Income - SSA A+ B
Fixed Income - Corporate Financial A+ B
Fixed Income – Corporate Non-Financial A+ B
Fixed Income – Securitized A+ B

UNPRI assessment report limited to asset managers signed up to the Principles for Responsible Investment (PRI) and based on how well ESG metrics are incorporated into their investment processes. The most recent UNPRI Transparency Report is available here. For methodology, please refer to About PRI Assessment.

3.b. If you are signatory to other coalitions, please list them.

As a leading global asset manager, PIMCO frequently receives requests to sign up to different initiatives that support various causes and guidelines including ESG efforts. Our ESG team vets and reviews each potential opportunity to ensure it aligns with our ESG philosophy and approach. We are highly involved with ESG and other sustainability efforts globally, helping to define global sustainability standards, and encourage greater disclosure from issuers. Below is a list of our industry leadership with global affiliations and initiatives:

PIMCO ESG Industry Leadership

Industry Leadership Overview

PRI Bondholder  Engagement Working Group

PIMCO is a Member

- This group is comprised of ~15 asset owners and managers who support the PRI by sharing their knowledge and experience in using bondholder engagement as a tool to help investors manage and mitigate investment risks related to ESG factors

- Role includes exploring, defining, and identifying trends in bondholder engagement, and publishing guidance for investor implementation

PRI Sovereign Working Group (SWG)

PIMCO is a Member

The purpose of this working group is to provide practical guidance for ESG integration and effective engagement in sovereign debt investing, by i) analysing material ESG risks and opportunities for sovereign bonds, ii) identifying main obstacles to further integration practices, and iii) establishing rationale and boundaries to bondholder engagement.

Carbon Disclosure Project (CDP)

PIMCO is a Signatory

- Organization that runs the global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts

- It is backed up by over 650 investors totalling $87 trillion in assets

PRI SDG Advisory Committee

PIMCO is a Member

- The purpose of this committee is to advise the PRI Association Executive on what activities PRI should, could undertake to stimulate, support and potentially monitor signatories who seek to align their investment strategy, policy, asset allocation, mandates, selection processes, investment decisions or active ownership with the ambitions of the SDGs.

UN Global Compact

PIMCO is a Participant

- This is a principle-based framework for businesses worldwide aimed to adopt sustainable and socially responsible policies and report on their implementation

- PIMCO supports the ten principles of the Global Compact with respect to human rights, labour, environment, and anti-corruption and is committed to incorporating them into our strategy, culture, and day-to-day operations.

UN Global Compact SDG Finance Lab

PIMCO is a Member

- This brings together a multi-disciplinary group of finance practitioners and experts to develop innovative private financial instruments that have the potential to direct private finance toward critical sustainability solutions

- The goal is to improve the risk /return profile of SDG Instruments to attract institutional investors.

Sustainability Accounting Standards Board – Investor Advisory Group (IAG)

PIMCO is a Founding Member

- This group comprises leading asset owners and managers who recognize the need for consistent, comparable, and reliable disclosure of material and decision-useful ESG information

- The group participates in the ongoing standards development process and encourages companies to participate in the development process

Climate Action 100+

PIMCO is an Investor

- This is a pledge made by investors to push 100 of the highest-emitting companies globally to do more to tackle the threat of climate change.

- More than 200 institutional investors with $26 trillion in assets under management pledged to support this initiative

FSB’s Task Force for Climate Related Financial Disclosures (TCFD)

PIMCO is a Signatory

- This task force has created a set of non-binding, voluntary recommendations for better climate-related financial disclosures 

- Its goal is to help firms understand what financial markets want from disclosure in order to measure and respond to climate change risks, and encourage firms to align their disclosures with investors’ needs

Institutional Investors Group on Climate Change (IIGCC)

PIMCO is a Member

- The leading investors coalition on climate change with more than 170 members across 13 countries, with over €23 trillion in assets

- The IIGCC is the membership body for investor collaboration on climate change and the voice of investors taking action for a prosperous, low carbon future

Cambridge Institute for Sustainability Leadership – Investment Leaders Group (ILG)

PIMCO is a Member

- A global network of pension funds, insurers and asset managers committed to advancing the practice of responsible investment

- It is a voluntary initiative, driven by its members, facilitated by the Cambridge Institute for Sustainability Leadership (CISL), and supported by academics in the University of Cambridge

- The ILG’s work is delivered through a series of member-led work streams, each supported by a range of experts from the investment industry, partner organizations and academics

PRI Fixed Income Advisory Committee

PIMCO is a Member

This steering committee comprised of asset owners and managers oversees work streams related to raising awareness and understanding of responsible investing, helping investors develop robust processes for implementing the PRI, engaging with credit rating agencies on ESG integration, and identifying and share best practices among PRI signatories

Global Investors for Sustainable Development Alliance (GISD)

PIMCO is a Member

- The GISD will focus on accelerating long-term investment into sustainable development

- In partnership with investors, governments and multilateral institutions around the world, the GISD will deliver concrete solutions to scale-up long-term finance and investment which will specifically contribute to the realization of the UN’s Sustainable Development Goals (SDGs)

International Capital Markets Association (ICMA)

PIMCO is a member of the Executive Committee

- The Association promotes building internationally accepted standards of best practice in markets through the development of appropriate, broadly accepted guidelines, rule, recommendations, and standard documentation. In order to maintain and enhance the framework of cross-border issuing, trade, and investing in debt securities

- The Executive Committee is responsible for the executive management and administration of the Association, including addressing all matters relating to the ICMA’s Principles: the Green Bond Principles (GBP), Social Bond Principles (SBP), and Sustainability Bond Guidelines (SBG). Ketish Pothalingam is on the Executive Committee.

Transition Pathway Initiative (TPI)

PIMCO is a Supporter

- A global asset owner-led initiative (including clients and investment consultants) that assesses companies’ preparedness for the transition to a low-carbon economy

- TPI data and tools help inform our assessment of climate risks and engagement with bond issuers

Climate Bonds Initiative (CBI)

PIMCO is a Partner

- A leading organization focused on fixed income and climate change solutions

- CBI has been instrumental in supporting more robust data and standards to propel the Green bond market, and remains heavily involved in shaping new Green bond-related regulations

CFO Taskforce

PIMCO is a co-Founder

- PIMCO, in partnership with the UN Global Compact and energy utility ENEL, launched the CFO Taskforce

- The aim of the taskforce is to mobilize hundreds of CFOs to tackle the financing needs around the Sustainable Development Goals

FAIRR

PIMCO is a member

- A global network of investors addressing ESG issuer in protein supply chains, with over $23 trillion in member AUM

- The aim of the initiative is to build a network of investors who are aware of the issues linked to intensive animal production and seek to minimize the risks within the broader food system

One Planet Framework

PIMCO is a member

- Initiative created following the 2015 Paris Agreement to collectively mitigate the effects of climate change

- Aims to help Sovereign Wealth Funds foster a shared understanding of key principles, methodologies, and indicators related to climate change; identify climate-related risks and opportunities in their investments; and enhance their decision-making frameworks to better inform their priorities as investors and financial market participants

As of 31 March 2021

3.c. Indicate any other international standards, industry guidelines, reporting frameworks, or initiatives that guide your responsible investing practices.

Please refer to the response to question 3 b) above

4. Please describe how ESG oversight and integration responsibilities are structured at your firm, including the process for escalation of key ESG issues. How do you obtain ESG information/data (e.g. public information, third party research, reports and statements from the company, direct engagement with the company)?

PIMCO’s ESG team is not a separate business unit, but integrated across all functions of the firm from portfolio management to client-facing, executive office to IT, compliance to marketing. This ensures that ESG is fully integrated into PIMCO’s broad research process and includes staff at every point along the value chain. We believe it is important to have all of our expert analysts monitor the ESG risks that are relevant to their particular sector and universe of securities. This ensures that ESG risk factors and opportunities are fully integrated into our investment decision-making, as opposed to being an “add-on” separate from our financial analysis.

To help set the priorities for the firm’s ESG Platform, PIMCO has a dedicated ESG Leadership Team in place that is responsible for leading firm-wide ESG integration, enhancing our ESG capabilities and supporting the development of ESG label portfolios. The group sets objectives and evaluates strategic initiatives on a continuous basis throughout the year. The ESG Leadership team is comprised of: Scott Mather, Managing Director and CIO U.S. Core Strategies; Kwame Anochie, Executive Vice President; Gavin Power, Executive Vice President; Lupin Rahman, Executive Vice President; Del Anderson, Senior Vice President; and Grover Burthey, Executive Vice President. Scott Mather is the sponsoring CIO for the firm’s ESG Platform with direct responsibility for these efforts. The Leadership Team, along with the ESG Specialty Desk on the trade-floor including engagement and integration analysts, works closely with the credit research team to ensure consistency in evaluation methodology and to integrate ESG research across sectors and asset classes. The team meets biweekly with presentations and regular updates among the team leaders. In addition, the group regularly invites external speakers to present their expertise in this field.

Please see below for PIMCO’s ESG Leadership Team as of June 2021:

PIMCO Credit Research ESG Integration

PIMCO credit analysts maintain research coverage of a broad range of credits, with an emphasis on independent, original research, including on ESG criteria.

In determining the efficacy of an issuer’s ESG practices, PIMCO will use its own proprietary assessments of material ESG issues. To facilitate the systematic integration of ESG risk factors in our analysis and help to monitor ESG related risks, we are continually enhancing our proprietary credit research software with specific ESG related attributes. In addition, we have hosted training sessions for our credit analysts on available ESG data and tools. 

From a security selection perspective, the firm’s global research aims to evaluate ESG-related issues across all of the issuers that we cover as part of their credit analysis.

To help with this evaluation, we have enhanced the ESG-focused section of our credit research templates to more effectively capture relative performance across companies. Our credit research templates include fields to capture the PIMCO View and Recent Trends across each of the three E, S and G categories as well as a field to flag ‘Significant ESG Concerns’ that Portfolio Managers should be aware of when they invest in the issuer. 

To illustrate our approach, please refer below for a general example of how ESG criteria are incorporated into our credit assessment:

Further, we have developed a proprietary scoring system whereby each issuer is assigned three separate numerical scores from 1 to 5 (with 5 being the highest) to their environmental, social and governance-based business practices. The score in each category is related to an issuer’s rank relative to industry peers, and the relative weights of the E, S, and G scores vary based on industries as each industry is assigned a different factor weight. We use the MSCI rating for reference but make our own assessment based on our own, independent analysis of the industry and relevant ESG factors. Each factor gets assessed on whether its leading, inline or weaker than peers so that we capture our analysts view versus peers. Additionally, our credit analysts include a forwarding looking view of the issuers by indicating improving/ deteriorating or stable.

As illustrated below, scores distinguish between “Leading Practice” issuers and those that raise “Significant Concerns.” They also include a forward-looking assessment of the “ESG Trend,” which recognizes companies whose ESG performance is significantly improving or deteriorating.

These factors are combined to create a proprietary score in which the relative weighting of the E, S, and G pillars, and the trend assessment, are based on the company’s business profile and differences in industry dynamics. For example, the environmental pillar has the highest weight for issuers in extractive industries (oil, gas and mining), the social pillar has the highest weight for pharmaceutical issuers, and the governance pillar has the highest weight for financial issuers.

PIMCO’s ESG Scores complement the traditional ratings assigned to companies by credit analysts. We currently have proprietary ESG scoring in place for corporate issuers, sovereigns, securitized issuers and municipal issuers, in addition to a unique green bond scoring framework to evaluate the attributes of each green bond issuance. We use MSCI and other data providers for reference but make our own assessment based on our own, independent analysis of the industry and relevant ESG factors. PIMCO credit analysts have scored over 2,800 parent issuers on ESG performance. ESG issues are highlighted in their credit research notes, alongside PIMCO’s internal credit ratings and recommendations for portfolio managers to consider when they are evaluating investments for all PIMCO portfolios, including non-ESG dedicated accounts. ESG scores are updated regularly whenever relevant new information becomes available.

Sources of ESG Research

The firm relies primarily on internal research for decision-making; however, PIMCO also screens substantial amounts of external research. External research can help PIMCO understand and anticipate the views and opinions of market participants, which in turn helps the firm gauge market sentiment and trends.

At PIMCO we regularly evaluate ESG research providers which may add additional input into our in-house analysis conducted by our credit, sovereign and mortgage analyst teams. In addition to Bloomberg, PIMCO currently utilizes MSCI as the primary external provider of ESG ratings and research but we also use  Reprisk for controversies, TruCost and CDP for climate change, SBTi and TPI for low-carbon transition, Human Impact and Profit (HIP) for municipal ESG research, Maplecroft and Haver for sovereign insights, and Freedom House for data on sovereigns to mention a few. MSCI data flows directly into our proprietary IT systems, enabling credit analysts to use this information efficiently. The research and analysis provided by external data providers is one of many factors in PIMCO's ESG analysis of issuers, the outcome of which is a proprietary ESG assessment and score which may differ significantly from that of other providers.

5. What channels do you use to communicate ESG-related information to clients and/or the public? Do you produce thought leadership (written reports and publications)? If so, is the information available to the public? Please provide links, if applicable.

Firm Level ESG Reporting

As a UNPRI signatory, we participate in the annual UNPRI questionnaire on the implementation of the six principles. PIMCO’s answers to this questionnaire are  publicly available.

PIMCO publishes an annual ESG Investing Report to address the integration of ESG factors into our investment process and engagement work on behalf of clients, among other ESG topics. Please refer to the attached Exhibit 1, PIMCO ESG Investing Report, for an example of PIMCO’s extensive reporting abilities.

In addition, PIMCO also actively publishes research reports, videos and publications about ESG and sustainable investment. PIMCO professionals have written thought pieces regarding ESG topics and these can also be found on our ESG dedicated website. For more details, please refer to https://www.pimco.com/en-us/our-firm/esg or https://blog.pimco.com/en/.

As the firm’s ESG efforts continue to grow, PIMCO will continue to invest in the firm’s infrastructure, reporting and monitoring in order to provide ever-greater value-add to our clients.

6. Do you have periodic reviews of your ESG process/approach to assess its effectiveness? What are the results? What would cause you to disregard ESG issues in your investment/analysis decisions?

Yes. PIMCO has a dedicated ESG Leadership Team in place that is responsible for leading firm-wide ESG integration, enhancing our ESG capabilities and supporting the development of portfolios with explicit ESG objectives. The group sets objectives and evaluates strategic initiatives on a continuous basis throughout the year.

The PIMCO Canada Canadian CorePLUS Bond Trust does not have an explicit ESG focused investment objective. PIMCO’s portfolios incorporate material ESG factors into the research process, but these factors are not directly used in portfolio construction decisions.

Climate

7. Describe how you identify, assess, and manage climate-related risks.

The following response is intended to address Questions 7 – 9.

PIMCO believes that climate-related factors may have material impacts on issuers’ credit quality (now and over the long term), affecting the full range of fixed income and related asset classes e.g. mortgage-backed securities, corporate credit, sovereigns and municipalities. While the PIMCO Canada Canadian CorePLUS Bond Trust is not managed to any particular climate risk targets, climate risk is integrated into the firm’s overall investment process through top down and bottom up research. Specifically, we have developed a number of internal proprietary tools to assess climate change-related risks in our portfolios.

For the past several years, climate change and other sustainability themes have featured prominently at PIMCO’s secular forums where we form our three to five year investment views. As part of the forum process, we invite external speakers that provide their views on a wide range of topics. With respect to sustainability, we have invited external analysts and scholars, such as experts focused on long-term climate change or responsible investment trends, to share their expertise on financial and economic issues that are germane to the outlook. For example, PIMCO has had Anne-Marie Slaughter from the New America Foundation, Daniel Yergin from the HIS Markit, former Secretary of Defence and Director of the CIA Leon Panetta, and Dr. Michael Greenstone from the Massachusetts Institute of Technology discuss climate change from a geopolitical and policy perspective in past forums.

In addition, from a top down perspective, PIMCO has also set up a Climate Risk Working Group, which includes representatives from various teams such as Economist, Risk, Analytics, Client Solutions, Credit and Portfolio Management. This group is focused on embedding climate-related risk into existing PIMCO core stress-testing tools, fund risk profiling and research. This includes a focus on scenario analysis based on emerging methodologies and guidelines, such as those seeking to model the potential impact on bond prices in the event of an extreme and sudden climate transition or failure to act.

Further, we also seek to integrate relevant climate factors into our bottom-up assessment. From our research analysts, we have built sector-based and bottom-up analysis involves a focus on issuers’ carbon emissions intensity using production-based metrics, such as emissions per barrel equivalent for oil and gas companies. A lifecycle methodology enables some comparison within the sector and over time, as well as in relation to climate scenarios and our forward-looking view. For instance, PIMCO’s fundamental analysis of credits in the energy sector closely examines companies’ exposure to different types of energy sources, environmental and regulatory risks to their business activities, the relative cost positions of companies and their commitments, and steps taken to diversify into lower-carbon sources of energy. Ultimately, we look to map the extent to which long-term climate risks are reflected in our credit views and bond prices, and, if they are not, what this could mean for issuers’ credit quality considering bond characteristics (e.g., duration) over time.

Finally, at the firm level, our climate strategy broadly aligns to the recommendations of the TCFD. As investors we recognize that climate change will likely have a profound impact on the global economy, financial markets, and issuers. PIMCO will continue to improve our climate risk assessments, disclosures and portfolio monitoring.

Please refer to Exhibit 1, PIMCO ESG Investing Report, and Exhibit 5, PIMCO Viewpoint – Managing Climate Risk, for further detail on PIMCO’s climate change analysis.

8. Describe the climate-related risks and opportunities you have identified over the short, medium, and long term.

Please refer to the response to question 7 above.

9. Describe the resilience of your investment strategy, taking into consideration different climate- related scenarios.

Please refer to the response to question 7 above.

10. Do you track the carbon footprint of portfolio holdings?

No

If yes, please describe the methodology and metrics used, and whether you have a set target for reducing the portfolio's footprint.

For non-ESG dedicated portfolios, we typically do not monitor the carbon footprint or manage the portfolio according to specific carbon-related targets.

11. What are your firm's emissions? Please demonstrate how/whether you are taking steps to reduce these emissions.

Yes. PIMCO is in the process of auditing its firmwide carbon footprint, looking at critical areas including energy, electricity, and overall resource management. PIMCO’s Carbon Footprint is offset through the Allianz Group.

Also, we do audit our carbon footprint, internally by Allianz and through an external auditor. Please refer to the attached, Exhibit 2, Allianz Group Sustainability Report.

Diversity

12. Please provide the composition of your senior leadership team and board of directors, including women and visible minorities. How do you encourage diversity of perspectives and experience?

Please refer to the attached, Exhibit 3, PIMCO ID DDQ and Exhibit 4, PIMCO Inclusion and Diversity Flyer for further detail.

Proxy Voting

13. What proportion of the time do you vote with or against management on shareholder resolutions, board appointments, and auditor appointments? What proportion of the time do you vote with or against management on ESG issues? How does this break down for climate, diversity, and remuneration issues?

The following response is intended to address Questions 13 – 17.

Given the nature of PIMCO’s business in fixed income, proxy voting is a more limited form of engagement on sustainability issues. However, our bondholder engagement platform focuses on sustainability and climate risk disclosures, Paris Agreement-alignment, business practices, green bond financing, among other key topics.

PIMCO’s Global Proxy Voting Policy Summary is available online at the following website: https://www.pimco.com/en-us/general/legal-pages/proxy-voting-policies-and-procedures.

14. What proportion of all independent ESG shareholder resolutions do you support?

Please refer to our response to question 13

15. What proportion of remuneration packages do you vote in favour of? In your view, is the current level of executive remuneration too high, too low, or about right? How is this view reflected in your voting record on remuneration?

Please refer to our response to question 13

16. Have you ever co-filed an ESG-related shareholder resolution? If so, how many and with what frequency?

Please refer to our response to question 13

17. Have you ever voted against a director for explicitly ESG-related reasons? If so, why? If not, would you consider doing so in the future?

Please refer to our response to question 13

Engagement

18. How many companies do you engage with? What proportion of your engagements focus on environmental and social issues? What are your engagement goals? Are these goals outcome/action-based (e.g. decreases in emissions or increases in number of women on the board) or means-based (reporting on emissions or number of women on the board)?

The following response is intended to address Questions 18 and 19.

In an ESG dedicated portfolio, PIMCO aims to engage intensively with the issuers in the portfolio to help influence ESG policies and drive more sustainable business practices. However, for non-ESG dedicated portfolios like the PIMCO Canada Canadian CorePLUS Bond Trust, there is no explicit objective to actively engage with ESG issuers on sustainability practices.

That said, at the firm level, on an annual basis, our team of over 75 credit analysts conduct more than 5,000 meetings and calls with company management teams. In addition to discussing financial matters, we also focus on strategic issues that relate to ESG risks and sustainable business management practices. For portfolios like the PIMCO Canada Canadian CorePLUS Bond Trust, this engagement is focused on material ESG issues that can have significant impacts on the credit profile of the issuer. Moreover, our non-ESG portfolios might benefit from the intensive engagement work pursued in the ESG dedicated portfolios, given that issuers may be held in both strategies. However, there is no obligation from the portfolio manager to own securities where PIMCO’s ESG analyst team is in the midst of a deep dive engagement as ESG engagement is not an objective of our non-ESG portfolios.

For some examples of our firm-wide ESG engagement efforts in 2020, please refer to Exhibit 1, PIMCO ESG Investing Report.

19. What is your policy around the escalation of engagement; how and why might this happen and what is the ultimate tool you might use (e.g. voting against board re-election, etc.)?

Please refer to our response to Question 18

Appendices

Disclosures

The information contained herein is as of June 30, 2021 unless otherwise noted.

No offering is being made by these materials. Interested investors should obtain a copy of the offering memorandum from your PIMCO Representative. The products and services provided by PIMCO Canada Corp. may only be available in certain provinces or territories of Canada and only through dealers authorized for that purpose.

The distribution of GIS Funds in Canada is being made on a private placement basis. Potential investors are advised to seek legal advice. Information pertaining to the GIS Fund is not to be construed as a public offering of securities in any jurisdiction in Canada. The offering of GIS Funds is made pursuant to an offering memorandum, a copy of which may be obtained by contacting your PIMCO representative, and only to 'permitted clients' (as defined in National Instrument 31-103). Read the offering memorandum carefully before investing.

Past performance is not a guarantee or a reliable indicator of future results.

A word about risk: Investing in the bond market is subject to risks, including market, interest rate, issuer, credit, inflation risk, and liquidity risk. The value of most bonds and bond strategies are impacted by changes in interest rates. Bonds and bond strategies with longer durations tend to be more sensitive and volatile than those with shorter durations; bond prices generally fall as interest rates rise, and the current low interest rate environment increases this risk. Current reductions in bond counterparty capacity may contribute to decreased market liquidity and increased price volatility. Bond investments may be worth more or less than the original cost when redeemed. Investing in foreign denominated and/or domiciled securities may involve heightened risk due to currency fluctuations, and economic and political risks, which may be enhanced in emerging markets. Sovereign securities are generally backed by the issuing government, obligations of U.S. Government agencies and authorities are supported by varying degrees but are generally not backed by the full faith of the U.S. Government; portfolios that invest in such securities are not guaranteed and will fluctuate in value. Mortgage and asset-backed securities may be sensitive to changes in interest rates, subject to early repayment risk, and while generally backed by a government, government-agency or private guarantor there is no assurance that the guarantor will meet its obligations. High-yield, lower-rated, securities involve greater risk than higher-rated securities; portfolios that invest in them may be subject to greater levels of credit and liquidity risk than portfolios that do not. Currency rates may fluctuate significantly over short periods of time and may reduce the returns of a portfolio. Inflation-linked bonds (ILBs) issued by a government are fixed income securities whose principal value is periodically adjusted according to the rate of inflation; ILBs decline in value when real interest rates rise. Treasury Inflation-Protected Securities (TIPS) are ILBs issued by the U.S. government. Derivatives may involve certain costs and risks such as liquidity, interest rate, market, credit, management and the risk that a position could not be closed when most advantageous. Investing in derivatives could lose more than the amount invested.

This material contains the current opinions of the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this article may be reproduced in any form, or referred to in any other publication, without express written permission. PIMCO is a trademark of Allianz Asset Management of America L.P. in the United States and throughout the world. ©2021, PIMCO.

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