Angel Oak Capital is Committed to Responsible Investment Practices
Angel Oak believes strongly that opportunities exist to meet or exceed its risk-return requirements while also delivering a positive impact on society. Angel Oak is committed to providing financial security to its investors, and views the integration of Environmental, Social and Corporate Governance (ESG) considerations into firm strategies as a way to help deliver superior long-term performance. Angel Oak is guided by its Responsible Investment Policy which provides a framework to integrate ESG factors into its investment strategies. This framework ensures that Angel Oak identifies and implements investment opportunities that address the UN’s Sustainable Development Goals (SDGs) while also meeting or exceeding its benchmark performance requirements.
Our Responsible Investing Approach
Angel Oak is proud to be a signatory to the United Nations-supported Principles for Responsible Investment (PRI), an organization that is dedicated to sharing information and furthering responsible investment practices for the betterment of the asset management industry and the global community. PRI is recognized as the leading global network for investors incorporating ESG considerations into their philosophies. Their network of international investors collaborate to implement a set of six principles providing a framework for integrating ESG factors into investment analysis and ownership practices aligned with fiduciary duties:
- To incorporate ESG issues into investment analysis and decision-making processes;
- To be an active owner and to incorporate ESG issues into our ownership policies and practices;
- To seek appropriate disclosure on ESG issues by the entities in which we invest;
- To promote acceptance and implementation of the Principles within the investment industry;
- To work with the PRI Secretariat and other signatories to enhance their effectiveness in implementing the Principles;
- To report on our activities and progress towards implementing the Principles.
Angel Oak was a founding member of UNPRI’s Structured Products Advisory Committee. Read a recent paper published on incorporating ESG into securitized products investing here.
Angel Oak’s Organizational Affiliations
Angel Oak is an investor in the CDP (formerly Carbon Disclosure Project), a not-for-profit organization that has developed a global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts. Since its inception, the CDP has created a system that has resulted in unparalleled engagement on environmental issues worldwide.
The Net Zero Asset Managers (NZAM) initiative is a group of international asset managers committed to supporting the goal of net zero GHG emissions by 2050 or sooner, in line with global efforts to limit warming to 1.5 degrees Celsius, and to supporting investing aligned with net zero emissions by 2050 or sooner. The specific components of Angel Oak’s commitment can be found on NZAM’s website here.
Angel Oak became a signatory to the Partnership for Carbon Accounting Financials (PCAF) in December 2021. PCAF is a global partnership of financial institutions that work together to develop and implement a harmonized approach to assess and disclose the GHG emissions associated with their loans and investments. Angel Oak is utilizing the PCAF’s factor-based GHG emission calculator to help facilitate the estimation of Scope 3 emissions for the CDP community bank climate risk disclosure project.
Responsible Investment Policy Summary
Angel Oak has emphasized responsible investment (“RI”) principles as an important component of the firm’s corporate values since its founding. Angel Oak implemented a Responsible Investment Policy in 2019 to govern its ESG-aligned investment strategies. Angel Oak has the opportunity to have a positive impact on society and the environment in all aspects of its business and operations. Angel Oak believes that taking an active approach to assessing ESG issues in investment decisions has the potential to generate enhanced performance for its investors as well as provide benefits to society as a whole.
Angel Oak invests across a broad variety of asset classes and takes its responsibility as a capital provider seriously. Angel Oak’s investment strategies will be implemented in a manner that optimizes the firm’s ability to contribute broadly to well-being and sustainable development through ESG integration, active ownership, and impact investing. Angel Oak has always encouraged the development of strategies that have a specific responsible investment or impact purpose.
Responsible Corporate Credit Strategy
Angel Oak Formally Incorporates ESG Factors into the Investment Process for a Number of its Strategies
- Specific ESG issues addressed in initial and ongoing due diligence process
- ESG scorecard assesses relative and absolute alignment with ESG factors
- Periodic engagement with the invested company’s management to improve alignment over time
Financial Strategies Income Term Trust
Angel Oak’s ESG-integrated investment strategies strongly align with the ESG factors incorporated in the United Nations Sustainable Development Goals (SDGs)
- Lending to designated affordable housing projects
- Loans to industries that have positive environmental and societal benefits
- Solar/renewable energy
- Waste management/recycling
- Pollution and chemical remediation
- Small Business Administration (SBA) program loans to local companies which support job creation
- Activities that satisfy Community Reinvestment Act (CRA) requirements
- Affordable housing loans to low-to-moderate income borrowers
- Loans to businesses in economically distressed areas
- Student lending programs
- Lending to support nonprofits, foundations, and government agencies
- Environmental insurance policy providers
Angel Oak Social Bond
Angel Oak’s Social Bond Framework governs the issuance of securitizations from the Angel Oak Mortgage Trust that Angel Oak designates as social bonds. The Framework addresses the following components of the 2020 International Capital Market Association’s Social Bond Principals:
- Use of Proceeds
- Process for Project Evaluation and Selection
- Management of Proceeds
- External Reviews
Angel Oak engages an independent reviewer each year to prepare a Social Securitized Bond Annual Report. This report evaluates each securitized bond issued under Angel Oak’s Social Bond Framework, up to and including the final year that each bond is outstanding or in case of material changes to the structure of the bond or the underlying collateral.