RPIA SUSTAINABILITY REPORT 2021
OVERVIEW FIRM
RPIA SUSTAINABILITY REPORT 2021
OVERVIEW FIRM
36
37
INVESTMENT MANAGEMENT
INVESTMENT MANAGEMENT
ENGAGEMENT ACTIVITIES IN 2021
Monitoring our engagement processes and reporting results to our investors allow us to assess an issuer’s ESG profile on several fronts:
Knowing how a company addresses ESG risks and opportunities can provide key insights into how prepared it is for changes that will impact its business. As bond investors, we do not have the power of a proxy vote; however, the instruments we invest in are often not perpetual, which means we have many opportunities to engage with companies and discuss ESG-related topics. Moreover, in many companies that issue fixed income securities, the amount of debt outstanding is larger than the amount of equity on the balance sheet. Furthermore, many private companies issue debt in the global capital markets, providing fixed income asset managers with the opportunity to engage with companies that are out of reach for equity investors. In these discussions, we gain insights not always available in the data. Specifically, management teams share with us their future visions for managing ESG-related risks and opportunities, and we have a chance to share our views on where companies can improve and what topics are important to our investors. We expect additional regulatory developments regarding disclosures and requirements for reporting ESG metrics in the coming years. However, we strongly believe that companies should not wait for these to materialize but rather try to lead by example and go above the “minimum standards” set by peers or previous bond deals.
The breadth of disclosures across different business areas and metrics
Quality of information provided
Forward-looking plans for ESG-related risks/opportunities
We incorporate ESG into our engagement practice by:
How well management is executing these plans
Identifying industry-specific ESG factors on which to engage with issuers
We acknowledge that these relationships take time to develop, and we appreciate that data is released or updated much less frequently than traditional financial statements and filings. However, we continue to advocate for regular and engaging discussions about the ESG pillars with management teams, ESG specialists, and members of the Treasury functions at the companies, followed by our investment team members.
Advocating for initial/increasing ESG disclosures and assisting issuers with identifying material information, gaps, and best practices on a global basis
Updating our understanding of the ESG profile and future plans of an issuer through engagement discussions
Emphasizing that we believe every management presentation and communication should include an update on a company’s ESG strategy and achievements
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