Page 18 | RPIA SUSTAINABILITY REPORT 2024
ESG INTEGRATION
OVERVIEW
SUSTAINABILITY
CULTURE & VALUES
STEWARDSHIP
Engagement Activities in 2024 As an active fixed income investor, we occupy an important position among capital providers to many corporations. We believe engaging with issuers is a valuable part of our role as stewards of capital. There are unique opportunities for engagement within fixed income as outstanding debt is typically a larger portion of company balance sheets than equity, and private companies also issue debt in global capital markets. This allows fixed income asset managers to engage with influential companies not available to public equity investors. Engagements with issuers can be conducted at different stages of the credit story: pre-issuance or pre-deal stages, pre-investment stage, holding period, refinancing stage, or if an issuer faces a material credit impact. The level and focus of engagements may vary between issuers, according to the most material ESG risks and opportunities for each company. In the discussions we have with issuers, we gain deeper insights in addition to available data and reports. Here, management teams share their future visions for managing ESG-related risks and opportunities, and we can discuss where companies can improve and share the ESG topics that are important to our investors.
We incorporate ESG into our engagement practice by: • Identifying industry and company specific ESG factors on which to engage with issuers • Advocating for initial or improving ESG disclosures that aligns with globally recognized reporting standards and frameworks • Assisting issuers with identifying material information, gaps, and best practices • Updating our understanding of the issuer’s ESG profiles that we develop on an on-going basis, including our understanding of the issuer’s future targets and progress towards it • Emphasizing our belief that management presentations and communications should support transparent disclosure of ESG strategy and achievements Through engagement, we can deepen our assessment of an issuer’s ESG profile on several fronts: • Breadth of an issuer’s disclosures across different business areas and whether meaningful metrics are tracked and reported • Quality of the information provided • Forward-looking plans for ESG-related risks and opportunities • How well management teams are equipped to execute these plans • Insights regarding any headlines and other material changes to the company
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