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    For Insight, responsible investment is about value and values

    We believe all risks, including environmental, social and governance (ESG) risks, can affect the value of an investment.

    Our proprietary models evolve to help address the gaps in third-party ESG data. They aim to inform our engagement with companies and governments as we seek to better understand the ESG issues they face and how they are managed.

    We take a proactive role in supporting the long-term sustainability and resilience of markets. We have helped to drive change on significant regulatory and market issues to protect our clients’ long-term interests, as well as those of wider society

    To help clients stay abreast of relevant developments, we publish regular market insights, views from industry experts and reports detailing our efforts and the difference they make. Find out more about the responsible investment initiatives we support.

    Click here to read about some of our recent engagements with fixed income issuers.

    Investing responsibly means managing risk. This includes risks to the wider market, as well as the specific underlying risks that determine whether an investment is fair value.

    We believe integrating ESG considerations in our fixed income investment process, including the use of engagement with issuers to better understand material ESG risks that we may identify, can support better investment decision-making and ultimately help our clients to achieve their desired outcomes.

    Abdallah Nauphal, CEO
    Responsible stewardship at Insight

    Our latest 2022 report details our responsible investment and stewardship activity.

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    Seeking to understand how Insight applies its stewardship approach in practice?

    We explain how we look to integrate ESG factors in our research and analysis, including for liability-driven investment (LDI) and fixed income.

    2

    Looking for evidence of the impact of Insight’s responsible investment approach?

    We share our work to address systemic risks, details of our counterparty and thematic engagement programmes, and extensive case studies of our engagements.

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    After in-depth detail on Insight’s future plans to enhance its stewardship activities?

    We provide extensive information on our recent activities and identify our priorities for enhancements in 2022.

    A committed responsible investor

    2006

    Founding signatory to PRI1

    47

    equivalent full-time employees focused on aspects of responsible investment2

    c.80%

    Level of 2021 engagement related activity, covering some form of ESG matter, with debt issuers3

    >2,500

    Issuers covered by Insight’s Prime corporate ESG ratings4

    A responsible investment leader

      • Insight was a founding signatory to the UN-supported Principles for Responsible Investment (PRI), the world’s leading advocate for a responsible approach to investment that incorporates ESG factors in long-term investors’ decision-making.
      • Insight introduced proprietary ESG ratings for corporates to address the gaps in third-party data, especially for smaller, high-yield and emerging market debt issuers
      • We introduced the Insight Climate Risk Index, which we believe to be the investment industry’s first comprehensive ranking of how fixed income corporate credit issuers manage their climate change-related risks and opportunities. The Index covers c.1,900 corporate issuers.
      • Growth in the impact bond market led us to develop a proprietary impact bond analysis framework, to help our analysts discern whether an impact bond meets our expectations for sustainability characteristics.
      • In response to client demand, we introduced our first pooled fund with sustainability and ESG objectives, building on our years of expertise analysing and engaging with corporates on sustainability issues.
      • We introduced our country sustainability risk index, which generates ESG ratings for 186 countries. This aims to help us better understand the ESG risks at the country level across our portfolios.
      • Insight enhanced our proprietary ESG ratings, introducing customised metrics to make the data as pertinent as possible to our analysis and offering high coverage of global benchmarks: over 850,000 subsidiaries for 6,500 different parent entities have an Insight ESG rating
      • The PRI awarded Insight A+ ratings for strategy and governance, sovereign and corporate fixed income investment. It also awarded A ratings for our approaches to collateralised loan obligations, asset-backed securities and loans.
      • We substantially expanded our responsible investment policy, to spell out in detail the six principles that guide our business and investment approach. The new policy includes a Corporate Conduct Statement, outlining the conduct we expect from the corporates in which we invest.
      • We introduced sovereign ESG impact ratings, helping us understand how countries are aligned with the UN Sustainable Development Goals, enabling us to build portfolios for clients seeking sovereign debt portfolios with sustainability objectives.
      • We joined the UN Global Compact, confirming Insight’s commitment to supporting its 10 principles on human rights, labour, the environment and anti-corruption.
      • We became a signatory to the Net Zero Asset Managers initiative, committing to reach net zero emissions by 2050 at the latest. To support our journey towards net zero, we will either actively engage with our highest emitters, or ensure they are on a net zero pathway.
      • We introduced a thematic engagement programme, prioritising climate change, water management, and diversity and inclusion as themes on which to engage with issuers.
      • We introduced a counterparty engagement programme, with the objective of achieving a greater level of impact in our engagements with entities in their capacity as counterparties. We are taking a thematic approach focused on areas including environmental factors, remuneration, diversity and cyber.
    Taking the initiative with Prime

    Information on ESG factors and related risks is offered by a wide range of institutions and providers but there are significant gaps. We seek to deepen our understanding of such issues through our own analysis, engagement and using our proprietary Prime ESG ratings.

    There is variation in ESG data from different providers. For many smaller issuers, particularly emerging market or high-yield companies, the availability of relevant non-financial data lags information from larger issuers.

    For these reasons, we developed Insight ESG ratings, with customised metrics to make the data as pertinent as possible to our analysis.

    Insight’s Prime corporate Insight ESG ratings are generated by following a risk-centric approach with high coverage of global benchmarks.

    To read more on our ratings and how we use them, please click here.

    In 2017, we introduced our Prime climate risk ratings, which cover c.1,700 issuers according to how they manage climate change-related risks.

    We believe it to be the investment industry’s first comprehensive ranking of how fixed income corporate credit issuers manage their climate change-related risks and opportunities, and how they are positioning themselves for the transition to a low-carbon economy. The index is designed to be used to assess risks and opportunities related to climate change.

    Please click here for more details, including:

    • how Insight uses the index
    • the methodology underlying it, and
    • details of key findings.

    We believe investing in sovereign debt can benefit from analysing ESG factors alongside other issues.

    In 2018, we introduced a proprietary country sustainability risk index in seeking to better understand the ESG risks at the country level across our portfolios.

    In 2021, our third-generation sovereign ESG framework incorporates two separate models: one that focuses on the risk of ESG factors to a sovereign’s creditworthiness, and an impact model that focuses on a country’s sustainable development performance.

    For more details please click here.

    Engaging on the issues that matter

    Insight proactively engages on industry and regulatory issues that have implications for our clients and the wider market. These include the transition from LIBOR, central clearing for European pension schemes, and climate change.

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    Insight is playing an active role in the interest-rate benchmark reform process, which will have implications for financial markets worldwide.

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    Insight is proactively engaging on key issues on behalf of pension schemes across Europe, responsible for the current and future income of millions of European pensioners.

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    Insight is considering and acting on climate change, including through a range of collaborative investor initiatives.

    Our responsible investment policies

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    In 2020, we expanded and broadened our responsible investment policy to better reflect our approach and set out our core beliefs.

    In our revised policy, we:

    • Summarise our beliefs about responsible investment
    • Specify six ways in which we seek to deliver on these beliefs
    • Include our Corporate Conduct Statement, which outlines how we expect companies in which we invest to behave.

    To read Insight Investment’s responsible investment policy, please click here.

    Insight does not invest in companies involved with the production, sale or maintenance of cluster munitions or landmines.

    There are two major international conventions that address cluster munitions and landmines specifically:

    • The Convention on Cluster Munitions (2008): This Convention restricts the manufacture, use, and stockpiling of cluster munitions and the components of these weapons
    • The Convention on the Prohibition of the Use, Stockpiling, Production and Transfer of Anti-Personnel Mines and on Their Destruction (1997): This Convention, often referred to as the Anti-Personnel Landmines Convention, aims to eliminate antipersonnel landmines around the world

    In line with these international conventions and following their ratification into domestic law by a number of countries, Insight has adopted a global policy which commits it to avoiding direct investments in companies that:

    • Design, produce, sell or maintain cluster munitions and/or landmines
    • Undertake research and development to develop cluster munitions and/or landmines
    • Breach the requirements of the Convention on Cluster Munitions or the Anti-Personnel Landmines Convention

    This policy:

    • Applies across all asset classes
    • Excludes affiliated companies: that is, companies with affiliations or commercial relationships with screened companies will not be excluded from investments
    • Does not apply to passive holdings in index-tracking instruments

    With respect to share ownership, in the majority of the current equity investment strategies Insight does not have material investments in physical holdings. Where Insight does hold physical equity positions we routinely vote on behalf of our clients with regard to the companies in which they have a shareholding.

    Insight retains the services of a third party for proxy voting services and votes at all meetings where it is deemed appropriate and responsible to do so. The third party provider offers research expertise and voting tools through sophisticated proprietary IT systems allowing Insight to take and demonstrate responsibility for voting decisions. Independent governance analysis is drawn from thousands of market, national, and international legal and best practice provisions from jurisdictions around the world.

    Independent and impartial research provides advance notice of voting events and rules based analysis to ensure contentious issues are identified. The third party provider analyses any resolution against Insight-specific voting policy templates which will determine the direction of the vote. Where contentious issues are identified these are escalated to Insight for further review and direction. Insight will undertake a review of the voting policy templates on an annual basis.

    To read Insight Investment’s proxy voting policy, please click here.

    Insight's equity voting records are available here.

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    Insight became a signatory to the Net Zero Asset Managers initiative in April 2021, committing to reach net-zero emissions on the assets it manages by 2050 at the latest. We published our initial objectives and targets in line with the initiative’s commitment statement. Read about our pledge here.

    Scientific research shows that human-induced greenhouse gas emissions are responsible for global warming and its related climate events. Unless there are immediate, rapid and large-scale reductions in greenhouse gas emissions, limiting global warming to close to 1.5ºC or even 2.0ºC will be beyond reach. The damage that temperature rises of this quantum would cause, both to the environment, society and financial markets, is well documented.

    It is our view that we have a role as stewards of our clients’ capital to prevent such a scenario and ensuring a phase-out of thermal coal is central to that.

    Read about Insight’s position on thermal coal here.

    Insight has implemented a sustainability risks policy which sets out Insight’s policies on the integration of sustainability risks in its investment decision-making process, as required by the EU Sustainable Finance Disclosure Regulation. Read a summary description of the key features of the policy here.

    Making a positive impact
    You may be seeking a positive impact with your investments. We can work with you to build a portfolio that incorporates such objectives. For example, we can apply a range of overlays for corporate debt portfolios as highlighted below.

    For a full range of definitions for responsible investment terms, including investment strategies, please see our responsible investment glossary.

    Further reading

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