RPIA SUSTAINABILITY REPORT 2022
OVERVIEW FIRM
28
INVESTMENT MANAGEMENT
ENGAGING WITH ISSUERS
Engagement Activities in 2022
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 multiple opportunities to engage with companies and discuss ESG-related topics. 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, allowing fixed income asset managers to engage with influential companies not available to public equity investors. In these discussions, we gain insights not always available in the data as management teams share their future visions for managing ESG-related risks and opportunities, and we discuss where companies can improve and what topics are important to our investors. As the regulatory landscape surrounding ESG evolves, we strongly believe that companies should not wait for regulations to materialize but should try to lead by example and go above the “minimum standards” set by peers or previous bond deals. We acknowledge that these relationships take time to develop, and we appreciate that data is released or updated less frequently than traditional financial statements and filings. However, we continue to advocate for regular and engaging discussions.
We incorporate ESG into our engagement practice by:
• Identifying industry-specific ESG factors on which to engage with issuers • 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 our belief that management presentations and communications should include an update on a company’s ESG strategy and achievements
Through engagement, we can assess an issuer’s ESG profile on several fronts:
• Breadth of disclosures across different business areas and metrics • Quality of the information provided • Forward-looking plans for ESG-related risks and opportunities • How well management is executing these plans
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