RPIA SUSTAINABILITY REPORT 2021
RPIA SUSTAINABILITY REPORT 2021
OVERVIEW FIRM
OVERVIEW FIRM
32
33
INVESTMENT MANAGEMENT
INVESTMENT MANAGEMENT
INCREASING FOCUS ON THE SOCIAL PILLAR Although the environmental pillar has been top of mind in recent years, we believe that the social pillar will become as important in the coming years, especially as we see increased disclosure and standardized metrics. We are now seeing more focus on social metrics, particularly how companies manage diversity, equity, and inclusion, and the impact on their customers. This increased focus on the social pillar is evident in the amount of Social and Sustainability bonds issued in 2021 relative to environmentally-focused issues (“Green bonds”). We believe this increased issuance reflects how many issuers recognize that the social pillar can no longer be ignored.
RPIA’s Workplace Equality Framework
PV
PI
Participation / Attrition / Recruitment
PI
Representation
Participation
Promotions / Entry Level / Diverse Candidates
PII
Board / Executive / Management / Action Plan
PIII
Equal Pay
Mobility
PII
Social Pillar Becoming an Increasing Focus for ESG Bonds
PIV
Gender Pay / Top & Mid Quartile / Action Plan
PIV
Leadership
36%
Minority Groups / Disability / Indigenous Engagement
$1,200
PV
PIII
$1,000
$800
36%
$600
Women in the Workplace
14%
$400
8% 11%
How a company manages DE&I needs to be assessed across many levels. In the infographic on the next page we highlight the five pillars that make up our Workplace Equality framework. Our goal is to push issuers to disclose information on all aspects of diversity in the same detail that we have seen in gender metrics. We will use our engagements as opportunities to increase detailed disclosure across all population groups. In conjunction with that, we aim to use our own DE&I survey data to set ambitious and relevant goals for these pillars within our firm to improve workplace equality and transparency and ensure that we apply the same expectations to ourselves as we do the companies in which we invest.
5%
$200
7%
2% 0% 5%
$-
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Green Social Sustainability % of Issuance Including Social UoP
Source: Bloomberg UoP = Use of Proceeds
In light of this trend, and based on conversations with our investors, we found that gender diversity disclosure has improved enough to become measurable, and improvements would be impactful for the companies we invest in. Upon reviewing disclosures provided by many companies across the global fixed income sectors, we found that although most issuers reported on gender diversity, their metrics were often limited to female representation on their board or the percentage of their workforce that was female regardless of seniority. While these metrics are clearly important, we saw the opportunity to design a scoring system that took a more in-depth review of how an issuer encourages gender diversity in their workplace. The result was a scoring system built on five pillars, four of which focus on gender diversity and a fifth that incorporates other forms of diversity (ethnicity, disability, Indigenous peoples), for which data is currently less widely available but critical in our view. We will continue to advocate for an increase in the breadth of disclosures of these metrics and encourage management teams to incorporate these into their targets at the company or security level where appropriate.
Infographic Sources: McKinsey & Company and LeanIn.Org, OECD “Women in the Workplace” September 27, 2021 “COVID-19’s Impact on Women’s Employment” March 8, 2021. “Diversity Wins – How Inclusion Matters” May 19, 2020. OECD (2022), Gender wage gap (indicator). doi: 10.1787/7cee77aa-en (Accessed on 10 January 2022). Gender pay gap defined by as the difference between median earnings of women relative to median earnings of men. Full-time employees.
January 25th, 2022. All data presented as of 2020 or 2019
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