JANUARY 2024

PIMCO’s Best Practice Guidance for
Corporate Sustainable Bond Issuance
PIMCO’s ESG (environmental, social, and governance) analyst team outlines the following bestpractices for issuers of green, social, sustainability or sustainability-linked bonds.
Outline:I) Best practice guidance for green, social and sustainability bondsII) Sustainability-linked bonds
III) Background on PIMCO Sustainable bond and climate engagement frameworks
I)

Best practice guidance for green, social and sustainability bonds
1. International Capital Market Association (ICMA) Principles and Guidelines: Bond framework should be clearly aligned withICMA Green and Social Bond Principles and Sustainability Bond Guidelines (e.g., setting out eligibility thresholds and planned
impact reporting) with specific details where feasible (e.g., examples of investments linked to positive sustainability outcomes).
2. Sustainable Development Goals (SDGs): Use of proceeds should be clearly aligned with the Sustainable Development Goals(SDGs), with impact reporting referencing specific targets or indicators. ICMA has provided a high level mapping to the SDGs
and the United Nations Development Programme (UNDP) has developed SDG Impact Standards for Bond Issuers.
3. Sustainability disclosure and connection with the issuer long-term strategy: Bond framework should be aligned withsustainability objectives that are connected to the firm-wide business strategy and a robust disclosure, e.g.:a. Governance and disclosure aligned with standards and frameworks such as Task Force on Climate-related Financial
Disclosures (TCFD), International Sustainability Standards Board (ISSB) or Greenhouse Gas (GHG) Protocol,
including disclosure of Scope 1, Scope 2, and Scope 3 GHG emissions where material, and the related risks.
b. Ambitious greenhouse gas emission reduction target recognized by standards or scenarios such as those developedby the Science-Based Target initiative (SBTi).
c.

Business and investment mix shift as per recognized standards or scenarios such as the International Energy Agency(IEA) and Intergovernmental Panel on Climate Change (IPCC)/Paris agreement-aligned pathways for Net Zero
Transition Plans, including sector specific indicators, e.g., coal or internal combustion engine scale down and phaseout for utilities and auto, respectively.

4. Use of proceeds (UOPs): The issuer should communicate the expected UOP by type of activity (e.g., renewable energy by
type, building by green certification level) and type of spending (e.g., capital expenditures versus operating expenditures) aheadof the new issue.
a. UOP should finance/refinance eligible capital or operating expenses, not philanthropic efforts.
b. Potential project pipeline: UOP on projects should disclose the total expected cost of the possible project pipeline.
5. Lookback period: If using a lookback period, issuer should indicate how much of the use of proceeds (UOP) will be allocated toprojects already funded (approximate estimate can be acceptable).
a. Preference is for UOP to fund new investments.
b. If UOP will be used to refinance or re-label prior spending, this should be disclosed.
c.

Strongest framework would be those with an explicit cap on refinancing and with short lookback periods.
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6. Negative impacts and Exclusions:a. Exclusions should include relevant details (e.g., metrics and thresholds used where appropriate, value chain level,alignment with firm-wide policies)b. Framework should outline safeguards to avoid (as much as possible) unintended negative externalities. For projects
where significant negative externalities are possible, the disclosure before the issuance of a strongsocial/environmental risk assessment from a reputable third party provider is recommended.
7. Time Period Of Allocation and Duration of activities:
a. Operating expenses should be supported by a compelling case (e.g., maintenance costs related to green assets, or
research and development spending into breakthrough low-carbon technologies) or kept to a minimum. If an issuer
includes operating expenses (e.g., spending on diverse suppliers), it is the issuer’s responsibility to provide justification
on how such operating expenses translate into consistent spending in the long term, and align with an ambitious longterm sustainability strategy for the underlying themes (e.g., diversity, equity and inclusion, also see 7.b).
b. Eligible projects should have duration at least equal to the full life of the bond: Or the issuer should commit that
repayments and maturing investments will be reinvested in additional eligible projects until the maturity of the bond.
1. For example, proceeds used to purchase goods for sale or make loans should be renewed over the expected
life of the issue or longer.
2. The reinvestment commitment aligns the “flow” UOP for the purchase of sustainable cost of goods sold
(COGS) with a “stock” UOP that funds long-term capital investments (e.g., solar and wind generation).
8. Transparency and Verification: Provide supporting documentation to investors in a timely fashion so they can make an
informed underwriting decision, at least a full working day prior to issuance (for syndicates).
a. Bond framework should be a standalone document (i.e., not only as a Use of Proceeds statement in the prospectus
or pricing supplement) available publicly on the issuer’s website. In jurisdictions where there are legal challenges topublishing a separate framework in advance of a new issuance, issuers should make the framework available on theirwebsite as soon as feasible after the deal is announced.
b. External review (second party opinion, verification, or certification). Verification is currently not a requirement toachieve Green Bond Principles (GBP), Social Bond Principles (SBP) alignment, though this is recommended practice.
Climate Bonds Standards: more climate-science focused, this standard goes beyond the ICMA
Green Bonds Principles to set forth more targeted eligibility criteria that are consistent with the 1.5
degrees Celsius target for containment of temperature increase.
We have preference for second-party opinion (SPO) providers that holistically assess theframework against best practices, including its sustainability impact and references to the relevant
sections of the complete ICMA’s guidance (e.g., Q&A), rather than just confirming alignment withICMA Principles. This involves addressing both the strengths and weaknesses of each framework.

c. Sustainability report or update for the issuer and/or parent company.
d. Previous green, social or sustainability bond reports (allocation, impact).
9. Management and Allocation of Proceeds, including temporary use of proceeds: Issuers should avoid “temporary” Useof Proceeds. In cases where this is unavoidable, the issuer should transparently justify any temporary uses related to debt
refinancing or investment (e.g., project timetable, detailed disclosure and appropriate timeline for full allocation),
demonstrating that the delay in allocation to Eligible Projects is minimized. The debt repayment and investments
concerned should not be related directly or indirectly to any activities misaligned with the green bond objectives or ESG
exclusion criteria (e.g., General Corporate Purpose assets that may be linked to fossil fuel projects or dividends toshareholders of companies involved in such activities).
10. Impact Reporting: Should be In line with ICMA principles, for impact reporting (including its Excel template), and the SDGs:
a. Issuers should commit to providing an updated impact report including outcome metrics at least annually as long as
each bond remains outstanding, allowing investors to track changes and progress. The first report should be publishedno later than one year after the initial bond issuance. Any delay on the reporting should be proactively communicatedand clearly justified. Best practice is to report on the expected impact of the projects ahead of the issuance where2relevant (e.g., if a Life Cycle Assessment (LCA) of the potential impact of the project or products linked to the expenses
has been undertaken).
b. Impact reporting should link to firm-wide targets (e.g., if the company is targeting a 30% reduction in carbon intensity by
2025, they should present this in the framework document alongside metrics that the company reports related to thebond).
c.

Standardized format should enable aggregation from an investor’s perspective and automation by third party services(e.g., Bloomberg), with outcome metrics attributable to the specific investments funded by the UOP and each bond(i.e., reporting ‘per security’). Investors need to be able to calculate their impact per unit of investment in the bond andneed to be able to aggregate impacts at a portfolio level across multiple bonds. Example of good practice: Nordic
Investment Bank (NIB)’s impact tables.

d. Regarding carbon emissions, issuers should include avoided emissions and aggregate absolute (scope 1, 2, and,
where material, scope 3) emissions, carbon intensity per sales and relevant output-based metrics (e.g., megawatt hour
(MWh) for energy or square meter for real estate), to allow comparison with firm-wide carbon performance and peers
in a portfolio context, and in line with the Greenhouse Gas (GHG) Protocol that indicates ‘Companies should not makeclaims about positive impacts without being transparent about whether their Scope 1, 2, and 3 emissions are
increasing or decreasing’. Example of good practice: Castellum. The Greenhouse Gas Protocol defines Scope 3
emissions as all indirect emissions in the value chain of a company not captured in Scope 2, indirect emissions fromthe generation of purchased energy, or Scope 1, direct emissions from owned or controlled sources.
e. Provide specific guidance about output-based metrics (buildings per exact certification level, e.g., Leadership in
Energy and Environmental Design (LEED) Silver or above, and energy performance improvements for retrofits, e.g.,
two notch increase in Energy Performance Certificate (EPC) label). Example of good practice: ARE.
f.

Include the geographic location of each project. Example of good practice: Avangrid

g. Provide ‘ownership’ impact metric, total and project specific data. Example of good practice: MUFG. Investors need toattribute outcome metrics relative to the amount invested in the bond. Issuers should report the [Outcome Metric]
volume that can be attributed specifically to the investment funded by the bond and all firm-wide numbers need to be
on a bond-by-bond basis. In cases where the bond only partially funds a larger project, the portion funded by the bondneeds to be disclosed on a project-by-project level.
h. Include details on the methodology and calculation for the metrics reported including emission factors, including
independent verification. Example of good practice: BBVA .

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Recap of noteworthy practices structured per sector, including additional examples:
SectorExampleGood Practice for disclosing…

SourceBanks

KBC Groep NV

Methodology to calculate avoided emissions, including independent verification

Link

Banks

ING

Methodology to calculate avoided emissions, including consultant input and publicationof both pre and post issuance impact reports

Link

Banks

Bank of America

Details on projects financed in a dedicated webpage including key bond documents

Link

REIT

Globalworth

Detailed environmental data on the portfolio's carbon and energy intensity andperformance over time including like for like

Link

REIT

Citycon

Providing the BREEAM or LEED Certification level for each project, accessibility by lowcarbon transportation

Link

REIT

Hudson Pacific Property

Green building certification target linked to the use of proceeds is part of thecompensation of executive management

Link

Utilities

OrstedGranular and comprehensive green bond impact reporting, including connections with
firm-wide strategy and targets

Link

Utilities

Iberdrola

Granular and comprehensive green bond impact reporting

Link

Utilities

Xcel

Holistic approach that includes social indicators mapped to the SDGs

Link

Telecom

Nippon Telegraph andTelephone

Allocation and impact report overall and per bond

Link

Telecom

Telefonica

Audited impact measurement including detailed allocation, impact methodology andseveral Key Performance Indicators (KPIs).

Link

Government-related

NIB

In a user friendly and standardized format that enables aggregation from an investor’s
perspective and to produce annual data (impact tables in Excel)

Link

Government-related

SNCF

Detailed methodology for avoided emissions on a lifecycle basis

Link

EXAMPLES PROVIDED FOR ILLUSTRATIVE PURPOSES ONLY

11. EU Taxonomy / EU Green Bond Standard: Proactively communicate the estimated alignment of the Use of Proceedswith the EU taxonomy for sustainable activities, in conjunction with firm-wide numbers (share of turnover, capex, opex).
a. Wherever possible and appropriate, issuers should ensure that the Use of Proceeds is aligned with the latest technicalscreening criteria (e.g., <100g CO2 /kWh for electricity generation, etc.) and that the bond is more broadly alignedwith the other proposed core components of EU Green Bond Standard.
b. This guidance, especially as it related to taxonomy disclosure, is relevant for issuers based outside of the EU as well to
expand the set of investors that may be able to invest in the bond.
12. Ambition.
a. Issuer’s firm-wide performance: ICMA’s Climate Transition Finance Handbook provides guidance for issuers in ‘hard
to abate’ sectors to demonstrate their credentials, and a registry of tools to support this evaluation.
b. Eligibility thresholds: The Paris Agreement-aligned pathways imply meaningful improvements versus business as
usual and the ambition to be increased over time, hence eligibility criteria to be tightened, not loosened (e.g., at least a
30% improvement for buildings retrofits and if possible higher).
c.

Types of expenses: Emphasize investments that are the most pressing and critical to advance the Paris Agreement
on climate change (e.g., Capital Expenditures and Research & Development expenditures into areas identified aspriorities and leading to meaningful carbon savings for issuers’ core business and assets, e.g., renewable energy
generation and infrastructure, energy storage, electrification of energy end-use, green hydrogen, energy storage,
sustainable bioenergy, alternative proteins, instead of Corporate Renewable PPAs and operational expenditures linked
to modest energy efficiency improvements).

13. Green Bank Additional Tier 1 / Preferred Capital: Use of proceeds perpetual capital instruments are not favored. The
AT1 structure is capital for regulatory purposes, which means that its Use of Proceeds cannot be used directly to fund4

Green lending (loss absorbing equity capital; perpetual maturity; bail-in eligible; regulatory call dates; etc.). Our view isthat Green, Social and Sustainability bonds that are intended to support lending for Eligible Projects should be limited to
Senior and Subordinated instruments.
II)

Sustainability-linked bonds
1. ICMA’s Sustainability-Linked Bond Principles (SLBP) provide a framework for issuers to connect financing needs with theachievement of firm-wide sustainability performance and targets that advance global objectives such as the Paris Agreement or
United Nations (UN) Sustainable Development Goals (SDGs). PIMCO sees bonds linked to the global net zero goal and theSDGs as an emerging best practice for issuers seeking to demonstrate positive sustainability outcomes. We encourage issuers
to come to the market with frameworks that align with these voluntary process guidelines (including the Q&A that is part of the
ICMA Guidance Handbook), particularly for issuers in carbon intensive industries looking to make progress.
2. The table below identifies potential themes, SDGs, metrics and benchmarks that could inform the two first components of the
SLBP, namely: 1) The selection of key performance indicators (KPIs); and 2) Calibration of sustainability performancetargets (SPTs).
a. ICMA’s Illustrative KPIs Registry includes high-level recommendations as well as illustrative examples for theselection of Key Performance Indicators (KPIs) for Sustainability-Linked Bonds (SLBs). We advise against the use of
ESG ratings as KPIs or ESG KPIs that do not pass the materiality test (e.g., only including scope 1 and 2 emissions
even if scope 3 represents 40% or more of overall emissions), and encourage issuers to build on resources such as
ICMA’s KPI table and materiality map to incorporate several relevant and material KPIs that are not restricted togreenhouse gas emissions (e.g., food and beverages companies have an opportunity to include metrics related to thecircular economy, water and nutrition, in addition to scope 3 emissions).
b. The EU’s resources on the taxonomy provide another useful resource that issuers may leverage when issuing a
Sustainability-linked bond. For example, issuers may contemplate targets that would include an increase in the shareof revenues, loans or investment that is associated with activities compatible with the eligibility criteria.

Potential KPIs for Sustainability-Linked Bonds
Topic
Carbon emissions

SDG

Firm-wide target

Initiative or benchmarks

Paris-alignment or net zero carbon emissions based on absolute
Science Based Target initiative, Climate
greenhouse gas emissions and carbon intensity where applicable
Action 100+ Net Zero Benchmark(e.g., CO2/MWh or square meter)

Circular economy

Phasing out single-use plastics, % of recyclable, reusable orcompostable plastic packaging, % of bio-based materials

New Plastic Economy Global
Commitment

Deforestation'No Deforestation, No Peat, No Exploitation' (NDPE) by 2025 and nolater than 2030, including full traceability across supply chain (e.g., %of supply chain being traceable) and % of certified products, ideallymoving from mass balance to segregated / identity preserved

CDP, Forest 500

Electric vehicle

Share of battery electric vehicle in the fleet and lifecycle GHG
emissions of the fleet (intensity and absolute)

EV100

Health andNutrition

Increased/decreased exposure to products associated withpositive/negative nutrients and health outcomes (sodium, sugar, badfats vs protein, fiber), affordability and health outcomes

Access to Nutrition Index, nutrient
profile systems, WHO guidelines

Renewable energy

Share of renewable electricity consumption / production

RE100

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Water

Water intensity reduction, water withdrawals monitoring and reduction(context-based), supplier engagement, Water, Sanitation & Hygiene(WASH))

CDP, CEO Water Mandate

EXAMPLES PROVIDED FOR ILLUSTRATIVE PURPOSES ONLY

In relation to, or in addition to the guidelines outlined by the SLBP and its Q&A:
3. To be compelling, SLBs should include an interim SPT to reflect the issuer’s commitment to make consistent progress
and the importance of clear intermediary targets (i.e., coupon step-up instead of variable redemption amount at maturity or
coupon step-down). We do not regard SLBs with long maturities (>5yrs) that do not have an interim step as a sensible option andsee an opportunity for issuers to include shorter dated trigger dates.
4. PIMCO encourages issuers to incorporate progressive milestones into their SPTs to ensure that issuers demonstrateprogress throughout the life of the bond. For example, a ten-year bond with a KPI measuring the issuer’s share of renewableelectricity generation could include multiple SPTs over the life of the bond (e.g., 40% by year 3, 50% by year 5, and 60% by year
7, etc). Alternatively, we recommend issuers to include a clause in the prospectus stating that the most recent and ambitious targetof the issuer on a selected KPI and SPT will automatically apply on all outstanding bonds using the same KPI and SPT definition.
5. External verification of the historical performance for the KPI is recommended to be provided prior to the issuance,
including for the baseline, and the issuer is encouraged to disclose relevant details regarding the methodology for the KPI
calculation and data quality based on recognized standards (e.g., Partnership for Carbon Accounting Financials (PCAF) for
financed emissions, the Oil and Gas Methane Partnership for methane).
6. PIMCO recommends practices in line with typical covenants for bonds that are not labelled as ‘sustainable’ to facilitate
the mainstreaming of the instrument and its connection with credible and ambitious targets, i.e., changes in the financing conditions
including cash payments to investors rather than charitable donations, higher coupon step-ups for HY than IG issuers.
7. Combining the use of proceeds approach (green bond) with the Sustainability-linked bond format into one framework andissuance is encouraged for sectors with sizeable direct capital expenditures that would qualify as green expenses directly linked
to the advancement of a climate target incorporated into the SLB, e.g., notably among hard to abate sectors. The connection
between a SLB and issuer’s expenses can also be achieved via the incorporation of a taxonomy capex and/or opex target into
the bond (e.g., as done by Enel).
8. The reporting should provide relevant data to help assess the issuer’s strategy to meet the target. This involves ideally aquantification of the different levers expected to advance the target prior to the issuance and, post issuance, historical performance
disclosure including attribution (respective contribution of the different factors to the overall change in emissions).
For example, given in the context of greenhouse gas emissions reduction targets, we suggest to distinguish on a best effort
basis the following factors (building on the GHG Protocol):1) Changes in the reporting scope due to acquisitions, divestments, and mergers
2) Estimation methodology or data quality e.g. based on errors corrected
3) Aggregation methodology (e.g. equity share versus control/operational)
4) Real-economy reductions based on targeted measures (e.g. efficiency improvement, material or fuel substitution)5) Others e.g.
a. Closureb. Production level
9. We recommend issuers who have several targets and SLBs outstanding to produce a consistent aggregated dashboard
including key information mapped to the different data specific to each SLB (e.g., observation date, Sustainability Performance
Target, reporting date, step-up date (start accruing), first stepped up coupon date (payment date):• Emission (or other ESG KPI) reduction scope/perimeter (e.g. all business activities and subsidiaries)• Targeted reduction level.
• Timeline (year – short to long-term).
• Progress achieved to date (e.g., % reached).
• Levers to advance the target.
• Note on the methodology• Any external benchmark used or validation e.g. SBTi
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Similarly, if the methodologies or values in their SLB bond documents and marketing documents differ from the latest
issuer-level sustainability disclosure (e.g., sustainability reports), the issuer should proactively disclose and explainthese differences where relevant.
10. Call dates: best practice would include a clause whereby the step-up is triggered assuming the target is missed if the bond iscalled prior to the observation date, or a similar mechanism whereby the status based on the latest reported year is used if it is areasonable alternative (e.g., if it is called close to the observation date and the proportional rate of change ensuring the same levelof ambition is checked).
11. Coupon step-up date: the timing of the coupon step-up should be as close as possible to – and ideally align - the date of thepayment to investors with the date at which the company actually fails the SPT.

III)

Background on PIMCO green bond and climate engagement frameworks
PIMCO green bond framework
Our framework (outlined in our Sustainable Investing Report) assesses these instruments both prior to and after issuance,
mapping them across a spectrum based on three criteria:
1. Strategic fit: Alignment of the issuers’ climate / environmental / social strategies with the bond’s objectives and use ofproceeds.
2. Impact assessment: Evidence of significant positive outcomes compared to “business as usual” by the issuer.
3. Red flags and reporting: Screening for “red flags” and controversies and analysis of reporting and process(misalignments to market standards (e.g., Green Bond Principles)).
This results in a score and ESG recommendation regarding the suitability of these bonds for PIMCO’s portfolios.
PIMCO expectations towards issuers on climate change
We evaluate the evidence of issuer’s best effort and performance in relation to the following points, acknowledging issuers are atvarious stages, and the importance of the direction of travel and momentum. These expectations build on several frameworks,
including the Task Force on Climate-related Financial Disclosures, International Sustainability Standards Board (ISSB)and
Science-Based Target initiative.
Issuer’s response to these questions inform: 1) Our green bond framework criteria (strategic fit) for our green bond score at theissuance level and; 2) PIMCO’s environmental assessment and score at the issuer level.
Both scores are integrated into PIMCO’s credit research notes.

ClimateAwareness
ClimateReadiness

ClimateAlignment

Recognitioni

Does the issuer recognize climate change as a significant issue and has it developed a policy?

Reportingi

Does the issuer report both its absolute and relative greenhouse gas (GHG) emissions across the entire
value chain (including scope 3), including carbon intensity based on relevant production metrics if appropriate(e.g., MWh for Utilities, km for Auto) and both current and historical performance?

Targetii

Has the issuer set a GHG emissions reductions target?

i

Does the issuer carry out and disclose a comprehensive and quantitative scenario analysis, including
conclusions regarding the financial impact and with reference to transition risk, e.g., policy shift towards 1.52°C temperature rise scenario, and physical risks, e.g., rise in frequency of extreme weather events?

ii

Does the issuer use an internal price of carbon consistent with the transition to net zero emissions by 2050
for its most relevant value chain impact (e.g., scope 3 for oil and gas, and auto) and factor it in to businessplanning and investment decisions?

Scenarios

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Strategyi

Has the issuer set a net zero commitment and Paris Agreement-aligned (1.5°C science-based) GHG
emissions reductions targets (including interim targets across all relevant scopes) and had it verified by the
Science-Based Target initiative (SBTi)?

ii

Does the issuer report a detailed transition plan including the respective contribution of all the levers to thetotal GHG emissions reductions and the investments associated with those (quantified plan setting out themeasures)?

Does the issuer report evidence that its business plan and broader actions are fully aligned with the Paris
iii Agreement (e.g., capex, R&D, technology, revenues, profit exposure outlook, lobbying) and potential climate
adaptation needs (resilience to physical risks)?
If the company has set a net zero target, 1) which share of lifecycle emissions does it cover; 2) does it plan toabsorb and offset emissions in line with the mitigation hierarchy (reducing emissions as a first order priority);iv
and 3) does the company disclose the absorption and offset mechanism details (including alignment with
science and certified methods of GHG removal and offsetting)?

FOR ILLUSTRATIVE PURPOSES ONLY

Contact: ESG_Analyst_Inquiries@pimco.com

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IMPORTANT INFORMATION
Please note that these best practices contain the opinions of the manager as of the date noted, and may not have been updated to reflect real time market developments. All
opinions are subject to change without notice.
Environmental (“E”) factors can include matters such as climate change, pollution, waste, and how an issuer protects and/or conserves natural resources. Social (“S”) factors can
include how an issuer manages its relationships with individuals, such as its employees, stakeholders, customers and its community. Governance (“G”) factors can include how anissuer operates, such as its leadership, pay and incentive structures, internal controls, and the rights of equity and debt holders.
PIMCO is committed to the integration of Environmental, Social and Governance ("ESG") factors into our broad research process and engaging with issuers on sustainability factors
and our climate change investment analysis. At PIMCO, we define ESG integration as the consistent consideration of material ESG factors into our investment research processwith the goal of enhancing our clients’ risk-adjusted returns. Relevant factors may include, but are not limited to: climate change risks, resource efficiency, natural capital, humancapital management, human rights, regulatory risks, and reputation risk at an issuer. Further information is available in PIMCO’s Sustainable Investment Policy Statement.
With respect to comingled funds with sustainability strategies and guidelines (“funds that follow sustainability strategies and guidelines”), we have built on PIMCO’s over 50-year
core investment processes, while actively incorporating sustainability principles. Through these guiding principles—excluding issuers fundamentally misaligned with sustainability
factors, evaluating issuers using proprietary and independent ESG scoring (in addition to externally sourced and internally developed criteria), and engaging with issuers on ESGrelated topics with the objective of improving investment outcomes - funds that follow sustainability strategies and guidelines seek to deliver attractive returns while also pursing toprovide a vehicle through which investors can meet their sustainability preferences. Please see each fund that follows sustainability strategies and guidelines prospectus for moredetailed information related to its investment objectives, investment strategies and approach to ESG.
There is no assurance that the socially responsible investing strategy and techniques employed will be successful.
A word about risk: All investments contain risk and may lose value. 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 sensitiveand volatile than those with shorter durations; bond prices generally fall as interest rates rise, and low interest rate environments increase this risk. 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. REITs are
subject to risk, such as poor performance by the manager, adverse changes to tax laws or failure to qualify for tax-free pass-through of income. ESG investing is qualitative andsubjective by nature, and there is no guarantee that the factors utilized by PIMCO or any judgment exercised by PIMCO will reflect the opinions of any particular investor, and thefactors utilized by PIMCO may differ from the factors that any particular investor considers relevant in evaluating an issuer’s ESG practices. In evaluating an issuer, PIMCO isdependent upon information and data obtained through voluntary or third-party reporting that may be incomplete, inaccurate or unavailable, or present conflicting information anddata with respect to an issuer, which in each case could cause PIMCO to incorrectly assess an issuer’s business practices with respect to its ESG practices. Socially responsible
norms differ by region, and an issuer’s ESG practices or PIMCO’s assessment of an issuer’s ESG practices may change over time. There is no standardized industry definition or
certification for certain ESG categories, for example “green bonds”; as such, the inclusion of securities in these statistics involves PIMCO’s subjectivity and discretion. There is no
assurance that the ESG investing strategy or techniques employed will be successful. Past performance is not a guarantee or reliable indicator of future results.
ESG-labeled instruments are defined as green, social, and sustainable bonds and sustainability-linked bonds. Green Bonds are those issues with proceeds specificallyearmarked to be used for climate and environmental projects. Social Bonds are use-of-proceeds bonds earmarked to finance new and existing projects or activities with positivesocial impacts. Sustainability Bonds are use-of-proceeds bonds earmarked to finance new and existing projects or activities with positive environmental and social impacts.
Sustainability-Linked Bonds (SLBs) are bonds that include sustainability-linked covenants, as explained by the issuer through use of a framework and/or legal documentation.
The issuers referenced are examples of issuers PIMCO considers to be well known and that may fall into the stated sectors. References to specific issuers are not intended andshould not be interpreted as recommendations to purchase, sell or hold securities of those issuers. PIMCO products and strategies may or may not include the securities of theissuers referenced and, if such securities are included, no representation is being made that such securities will continue to be included.
This material contains the current opinions of the manager and such opinions are subject to change without notice. This material is distributed for informational purposes only andshould not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained fromsources believed to be reliable, but not guaranteed.
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Branch are additionally supervised by: (1) Italian Branch: the Commissione Nazionale per le Società e la Borsa (CONSOB) (Giovanni Battista Martini, 3 - 00198 Rome) in accordancewith Article 27 of the Italian Consolidated Financial Act; (2) Irish Branch: the Central Bank of Ireland (New Wapping Street, North Wall Quay, Dublin 1 D01 F7X3) in accordance with
Regulation 43 of the European Union (Markets in Financial Instruments) Regulations 2017, as amended; (3) UK Branch: the Financial Conduct Authority (FCA) (12 Endeavour Square,
London E20 1JN); (4) Spanish Branch: the Comisión Nacional del Mercado de Valores (CNMV) (Edison, 4, 28006 Madrid) in accordance with obligations stipulated in articles 168
and 203 to 224, as well as obligations contained in Tile V, Section I of the Law on the Securities Market (LSM) and in articles 111, 114 and 117 of Royal Decree 217/2008, respectively
and (5) French Branch: ACPR/Banque de France (4 Place de Budapest, CS 92459, 75436 Paris Cedex 09) in accordance with Art. 35 of Directive 2014/65/EU on markets in financial
instruments and under the surveillance of ACPR and AMF. The services provided by PIMCO Europe GmbH are available only to professional clients as defined in Section 67 para. 2
German Securities Trading Act (WpHG). They are not available to individual investors, who should not rely on this communication. | PIMCO (Schweiz) GmbH (registered in
Switzerland, Company No. CH-020.4.038.582-2, Brandschenkestrasse 41 Zurich 8002, Switzerland). The services provided by PIMCO (Schweiz) GmbH are not available toretail investors, who should not rely on this communication but contact their financial adviser. | PIMCO Asia Pte Ltd (8 Marina View, #30-01, Asia Square Tower 1, Singapore 018960,
Registration No. 199804652K) is regulated by the Monetary Authority of Singapore as a holder of a capital markets services licence and an exempt financial adviser. The asset
management services and investment products are not available to persons where provision of such services and products is unauthorised. | PIMCO Asia Limited (Suite 2201, 22nd
Floor, Two International Finance Centre, No. 8 Finance Street, Central, Hong Kong) is licensed by the Securities and Futures Commission for Types 1, 4 and 9 regulated activities
under the Securities and Futures Ordinance. PIMCO Asia Limited is registered as a cross-border discretionary investment manager with the Financial Supervisory Commission of
Korea (Registration No. 08-02-307). The asset management services and investment products are not available to persons where provision of such services and products isunauthorised. | PIMCO Investment Management (Shanghai) Limited. Office address: Suite 7204, Shanghai Tower, 479 Lujiazui Ring Road, Pudong, Shanghai 200120, China(Unified social credit code: 91310115MA1K41MU72) is registered with Asset Management Association of China as Private Fund Manager (Registration No. P1071502, Type: Other).
| PIMCO Australia Pty Ltd ABN 54 084 280 508, AFSL 246862. This publication has been prepared without taking into account the objectives, financial situation or needs of investors.
Before making an investment decision, investors should obtain professional advice and consider whether the information contained herein is appropriate having regard to theirobjectives, financial situation and needs. To the extent it involves Pacific Investment Management Co LLC (PIMCO LLC) providing financial services to wholesale clients, PIMCO LLC

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is exempt from the requirement to hold an Australian financial services licence in respect of financial services provided to wholesale clients in Australia. PIMCO LLC is regulated by
the Securities and Exchange Commission under US laws, which differ from Australian laws. | PIMCO Japan Ltd, Financial Instruments Business Registration Number is Director of
Kanto Local Finance Bureau (Financial Instruments Firm) No. 382. PIMCO Japan Ltd is a member of Japan Investment Advisers Association, The Investment Trusts Association,
Japan and Type II Financial Instruments Firms Association. All investments contain risk. There is no guarantee that the principal amount of the investment will be preserved, or that acertain return will be realized; the investment could suffer a loss. All profits and losses incur to the investor. The amounts, maximum amounts and calculation methodologies of eachtype of fee and expense and their total amounts will vary depending on the investment strategy, the status of investment performance, period of management and outstanding balanceof assets and thus such fees and expenses cannot be set forth herein. | PIMCO Taiwan Limited is an independently operated and managed company. The reference number ofbusiness license of the company approved by the competent authority is (112) Jin Guan Tou Gu Xin Zi No. 015 . The registered address of the company is 40F., No.68, Sec. 5,
Zhongxiao East Rd., Xinyi District, Taipei City 110, Taiwan (R.O.C.), and the telephone number is +886 2 8729-5500. | Note to Readers in Colombia: This document is provided
through the representative office of Pacific Investment Management Company LLC located at Carrera 7 No. 71-52 TB Piso 9, Bogota D.C. (Promoción y oferta de los negocios yservicios del mercado de valores por parte de Pacific Investment Management Company LLC, representada en Colombia.). Note to Readers in Brazil: PIMCO Latin America
Administradora de Carteiras Ltda.Av. Brg. Faria Lima, 3477 Itaim Bibi, São Paulo - SP 04538-132 Brazil. Note to Readers in Argentina: This document may be provided throughthe representative office of PIMCO Global Advisors LLC AVENIDA CORRIENTES, 299, Buenos Aires, Argentina. | No part of this publication 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 LLC in the United States and throughout theworld. ©2024, PIMCO.
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