ENGAGEMENT CASE STUDY
Broadening Financial Access
Background: OneMain Financial is the largest nonprime installment lender in the U.S. and engages in inclusive practices such as lending to underserved communities, with 25% of its customers living in credit-insecure or credit at-risk communities. Through a proactive, long-term process, we encouraged OneMain to take incremental steps to provide access to finance for underserved communities while enhancing its commitment to responsible underwriting and improving disclosure. Scope and Process: Our focus was to leverage our long-term relationship with management to guide them toward incorporating best-in-class ESG policies and establish long-term objectives that would reinforce the company’s commitment to responsible underwriting and expand its lending efforts for underserved communities and populations. Our diligence process included 20+ discussions with senior management, including the CFO, chief risk officer, treasurer, general counsel, investor relations and equity stakeholders. We engaged with the company to establish an ESG strategy and enhance disclosures of its policies. In our view, formally establishing and publishing its ESG framework would increase transparency and reinforce the company’s commitment to responsibly servicing its communities and underserved customer population. We encouraged OneMain to establish a best-in-class social bond framework and engaged on the importance of transparency in oversight, reporting and performance tracking. Outcome: OneMain released its first ESG report in July 2020 and established its social bond framework in 2021, which aligned with the International Capital Market Association’s Social Bond Principles 2020, received a third-party alignment opinion from Standard & Poor’s, and is intended to align with UN Sustainable Development Goals 1.4, 8.10 and 10.2. OneMain issued its inaugural social bond in June 2021, for which we served as an anchor order in the $750 million issuance.
ISSUE Financial Inclusion and ESG Disclosures
CATEGORY Social
STRATEGY Non-Investment Grade Fixed Income
SECTOR Finance
RACHEL YOUNG Co-Director of Research and Senior Research Analyst
2021 ESG ANNUAL REPORT
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