Under section 414 of the UK 2006 Companies Act (the “Act”), the Company is required to include a section 172 statement, describing how the directors have had due regard to those matters set out in section 172 of the Act during the period in question. In addressing these matters, we would like to expand on the following:
Our Mission Statement
Insight's mission is to offer investors a different approach to achieving their investment goals; one that prioritises the certainty of meeting their chosen objectives in contrast to the traditional focus on maximising return and minimising volatility. We believe that our emphasis on certainty, a dimension largely neglected by the industry, provides investors with an improved investment experience, resulting in a more secure retirement or more confidence in their ability to acquire specific assets in the future. Furthermore, we tailor portfolios directly to clients' desired outcome rather than investing in generic products that benefit the manager more than the investor, further enhancing the chances of success.
We are committed to prioritising our clients' interests above all else in the conduct of our business and to delivering high quality investment solutions and service. Our business model rests on a simple equation: high quality leads to client advocacy which translates into business success. We, therefore, focus our efforts on delivering quality and are always prepared to forego business opportunities that conflict or weaken our ability to do so.
Focusing only on what we are good at rather than being everything for everyone is a key requirement for achieving that, so is working in partnership with our clients and their advisors. This allows us to better understand their needs and provide them with the tools and professional education they need for their investment journey. We also pledge to engage with relevant official and regulatory bodies to represent their interest and help find solutions that balance their benefits with those of society at large.
Aligning all stakeholders' interests is essential for the long-term success of any organisation. We align the interests of our clients and shareholders by taking a long-term view of the success of the business, allowing us to focus our energies on delivering to our clients. A significant portion of our staff's compensation is deferred and held in company shares. By giving our employees an economic stake in the business we help align their interest with those of the other stakeholders.
As responsible stewards of society’s savings, we also view the communities in which we operate as stakeholders in our business. As such, we seek an alignment that goes well beyond regulatory requirements. Focusing on environmental, social, and governance factors (ESG) forms part of that alignment. ESG factors have been embedded in our investment processes for a very long time and in our business practices for the last few years.
None of this would be possible without the ability to attract and motivate the right employees. We do not believe that any gender, race, or group of any kind has a monopoly on the talent that we need to succeed. We also believe that diverse groups make more informed and balanced decisions. We are therefore committed to looking for talent everywhere and ensuring that every individual has the opportunity and support to succeed at Insight.
We strive to create an ego free and collaborative environment where everyone is held accountable, but success is shared collectively. An environment where employees can speak up to share their views or challenge others’ views. We encourage continuous improvement at the individual level as well as the business level and make it a point to learn from our mistakes. Much of this boils down to putting the principle of "doing the right thing" at the heart of all our decisions.
The examples provided below show positive outcomes following consideration by the Insight Board of matters set out in section 172 of the Act during 2022.
Business relationships with key stakeholders
Insight considers clients to be the most important stakeholder and prioritises clients’ interests at all times. In an environment where the needs of clients are rapidly evolving, Insight aims to achieve a deep understanding of clients’ needs and considers client engagement to be a key element of promoting the long-term success of the Company.
The practical importance of Insight’s close communication with clients was demonstrated during the sell-off in bond markets which began in September 2022. The sell-off, which resulted in reduced liquidity and increased volatility, was a systemic issue affecting the UK gilt market and had implications for all market participants.
Throughout this period, liability hedges managed by Insight in LDI strategies were retained in line with client requirements in the vast majority of cases. We did not sell gilts on behalf of clients because of collateral concerns and LDI pooled funds continued to operate as normal.
Our client solutions team supported existing pension fund clients to ensure that portfolios remained resilient in the face of further market volatility. This included seeking to ensure that there was enough collateral to offset the impact of further volatility and reviewing the liquidity profile of assets held outside LDI portfolios.
Insight’s Chief Executive Officer volunteered to appear at the Department of Work and Pensions’ inquiry into defined benefit pensions with liability driven investments to share his views on this important topic. He provided oral evidence alongside industry peers on 7 December 2022 and also authored an opinion piece for the Financial Times, ‘A different perspective on LDI’, which was published as events unfolded. These engagements with industry stakeholders and the wider public were endorsed by the Insight Board and may well have contributed to educating various stakeholders about the wider benefits of LDI as a useful tool to matching the liabilities of pension schemes.
In the first nine months of 2022, when gilt yields were rising, Insight worked with its clients and their advisers to enhance resilience via a programme of engagement and information sharing, leading in many cases to asset allocation changes. There were multiple communications to clients during the period of disruption and Insight also remained in close communication with regulators, counterparties and central banks. This high degree of communication was relayed to the Insight board which remained supportive of having effective communication channels with clients and other key stakeholders.
Throughout 2022, Insight continued to receive a range of industry recognitions. For example, the business continued to have very strong relationships with consultants, as evidenced by the Greenwich Associates UK Investment Consultant Research. In the 2022 edition of this research, Insight was ranked first place for both Overall LDI Quality and Overall Fixed Income Quality with UK investment consultants. This meant that Insight was ranked in first place for Overall LDI Quality for the 12th consecutive year and has maintained a top decile ranking for Overall Quality in Fixed Income in every year since 2013.
The global communications firm, Edelman, also ranked Insight as the number one brand in institutional investment management in its most recent Asset Management Brand Index (last published in August 2021).
These acknowledgements demonstrate that Insight remained relevant to investors and consultants and that the firm consistently manages the expectations of clients, a key stakeholder group. The Board is kept informed of these achievements and continues to constructively challenge the business to maintain high client advocacy.
As part of its duty to promote the success of the business, the Board continually monitors the overall investment performance of Insight’s business. This, in part, helps to manage the interests of clients.
Insight’s employees continue to be critical stakeholders for the business and are critical to the Company’s success. During the gilt crisis, one of the key factors that allowed the firm to perform well was the drive and determination of staff. The Board acknowledges that having the right culture in place would position the company to address extraordinary circumstances, which was clearly demonstrated during the excessive sell off in the bond markets. The culture of the Firm is reviewed on a cyclical basis by the Board and Insight employs the assistance of external service providers to help gage employees’ sentiment, which is then communicated back to the Board. Management is tasked with ensuring that adequate attention is given to those areas requiring improvement. One approach used to address such issues is the establishment of various affinity groups. Staff are also encouraged to refamiliarize themselves with Insight’s Speaking Up Policy. Wherever possible, a flat management structure is also encouraged as it allows issues to be escalated and addressed more quickly.
In terms of staff engagement, during the period of high market volatility employees were kept informed of key aspects of how Insight was being impacted and how management was responding to the challenges from market conditions. Key messages were communicated via department heads or members of the Executive Management Committee. Following the intervention of the Bank of England which supported a degree of market stabilisation, executive members of the Board delivered a staff webinar to provide a reflective summary of how the Firm had performed and to express thanks for the resilience displayed by staff across the Firm. The webinar provided employees with the opportunity to pose questions to executives so that concerns could be addressed.
Values that are embedded within Insight’s culture continue to include Client Focus, Accountability, Teamwork, Cognitive Agility, Collaboration and Continuous Improvement.
As well as the cultural environment, focus is also placed on the physical environment for employees. Office spaces have been designed to be inclusive environments that can help reinforce key values such as teamwork and collaboration.
Insight also offers a hybrid working model to help its people find a better balance between their work and home lives. Management believes that this model, which is comprised of three days working in the office and two days working from home, supports our efforts to be an inclusive and collaborative organisation that can attract and retain diverse talent. In addition, Insight’s Extended Remote Working Programme allows colleagues to work remotely from home or another location for up to two weeks annually. For example, this could be time working from home during school holidays or as an extension to a family trip. Such initiatives have been reviewed and endorsed by the Insight board.
The Board is keen to see further progress in career development and diversity within the Firm. The existing diversity statement is under review and will be brought to the Board for consideration in due course.
Diversity, Equity & Inclusion (DEI)
The Board recognises that diversity of thought, talent and experience is critical to the long-term success of the business and society in general.
Insight’s Diversity, Equity & Inclusion Committee (DEIC) reports to the firm’s Executive Management Committee and includes a diverse array of executives from across the business. The DEIC remains committed to position Insight at the forefront of diversity within the asset management industry. This includes setting targets to increase the representation of women and ethnic minorities at all levels of the Firm – including the Insight Board. The objective is that in 10 years, the demographics of the regions in which Insight operates are mirrored in its respective local workforces.
All employees are encouraged to participate in various affinity groups mobilised around shared characteristics, interests or experiences. The affinity groups are an important part of Insight’s agenda to engage colleagues from across the firm as part of its diversity and inclusion ambitions. Throughout 2022, colleagues have been encouraged to join at least one affinity group to focus on areas of diversity that are regarded by the business as a high priority. These include:
- Women at Insight – supporting women at every stage of their career by providing opportunities for personal and professional development and raising awareness of the unique issues that female professionals face at different stages of their careers.
- Multigenerational Insight – promoting a non-hierarchical culture where all generations can connect and learn from one another.
- Multicultural Insight – ensuring that our culture is informed and inspired by the mix of people within our broader community.
- Disability Awareness – raising awareness of the challenges faced by employees with seen and unseen disabilities and helping to leverage the talent of employees with diverse abilities by building an inclusive and accessible environment.
- Outsight – promoting an environment where LGBT+ people are valued and can unlock their full passion and potential.
- Veterans at Insight – providing a support network for employees who are veterans, reservists or supporters of the military family
In addition to Insight’s affinity groups, all Insight colleagues have access to, and are encouraged to participate in, employee resource groups operated by Insight’s parent, BNY Mellon. Insight’s recruitment partners are also challenged to produce balanced shortlists to address the issue of underrepresented groups.
In 2022, Insight appointed a Head of DEI & Leadership Development to focus on the implementation of Insight’s DEI strategy, leadership & management development, employee engagement and learning and development.
Insight is also a member of the Diversity Project and undertakes a number of initiatives aimed to enhance diversity and inclusion. The Board is kept informed of the Company’s efforts in addressing DEI issues and is keen to monitor Insight’s progress in this key area of business.
Impact on the Community and Environment
Insight has a Corporate Social and Responsibility programme which focuses on three key pillars:
- Our markets: We seek to protect clients' interest and operate our business with integrity and resilience.
- Our people: We seek to encourage effective leadership, wellbeing, diversity and inclusion for our staff.
- Our world: We seek to invest and act responsibly to protect the wider world and to support the communities that we operate in.
Insight is also committed to contributing to a sustainable world where people succeed and economies thrive. We do this by constantly assessing the interests of the Company’s existing and potential stakeholders and contemplating how to act in their best interests.
Colleagues returned to the office in 2022. Those returning to the London office at Queen Victoria Street entered a building transformed by a BNY Mellon-led refurbishment undertaken throughout 2021. The environmental impact of the building was a key consideration for the rebuild, with the Leadership in Energy and Environmental Design (LEED) standard used to evaluate energy efficiency levels. The London office was awarded the LEED’ Gold rating in 2021 reflecting the materials and equipment used and the operation of the building.
In 2022, Insight published its first climate change report aligned to the recommendations from the Task Force on Climate-Related Disclosures (TCFD). The report included information on how Insight views climate change, how these views are applied within clients’ investment strategies as well as initial scenario analysis, looking at the potential impact of climate change on portfolios that Insight manages on behalf of clients. The report reflects extensive work done internally on this key issue and much of this content has been made available for the first time. It was prepared by Insight’s new Climate Change Resilience Group which reports into Insight’s Responsibility Oversight Committee as well as the Insight Board.
During the year, Insight reaffirmed its support of the Ten Principles of the United Nations Global Compact in the areas of human rights, labour, environment and anti-corruption. In its annual Communication on Progress, Insight described its actions to continually improve the integration of the Global Compact and its principles into its business strategy, culture and daily operations. Insight is also committed to sharing this information with its stakeholders, using appropriate channels of communication.
Insight’s TCFD report is complementary to the Firm’s Net Zero commitments, which Insight signed up to in 2021. With these commitments in place coupled with enhancements to the Firm’s controls and processes to address key ESG objectives, the Board feels that Insight is on a good path to achieving sustainable commercial success.
High Standards of Business Conduct
Insight has an unwavering commitment to stewardship
In its role as stewards of clients’ assets, Insight continues to enhance its controls and processes, expand its investment research and engagement activities, and has launched new initiatives to improve how clients’ assets are invested.
To ensure that teams are well equipped to tackle ESG and related risks, the Firm continued to strengthen and expand its stewardship and responsible investment expertise. Recognising the need for a clear and accountable investment leadership structure, in 2022 Insight appointed its first Head of Responsible Investment. Additional portfolio managers and specialists were also appointed to Insight’s investment teams and Responsible Investment team. In addition, more ESG champions have been embedded across the business. A detailed training programme has been introduced to cover responsible investment and stewardship-related activities. These activities have been undertaken with a view to gain a better understanding of client’s objectives, which are ever evolving. The Board acknowledges these activities as essential for future growth and receives pertinent information on these subject matters.
The Insight Responsibility Oversight Committee (IROC)
IROC is still regarded as a key internal forum which provides oversight and accountability for ESG related activities and their application across all business lines and investment activities. One of the objectives of IROC is to set strategic priorities and apply appropriate oversight to ensure that responsible investment performance aligns with Insight’s organisational objectives. The IROC is chaired by Insight’s CEO and oversees a range of committees which focus on various aspects of the Firm’s commitments to responsible investment on behalf of clients.
IROC’s focus includes oversight and accountability for climate strategy and policy, as well as overseeing investment and operational activities. IROC and its sub-governance groups are focused on achieving the best outcomes for clients and other stakeholder groups.
Regulatory Bodies & Suppliers
The directors recognise that as part of the objective to promote the long-term success of the business, maintaining a high standard of business conduct when dealing with stakeholders such as regulatory bodies and vendors is vital. Insight’s interactions with these stakeholders throughout 2022 are set out below.
Insight regularly collaborates with regulators and other market participants in order to contribute to fair, transparent and robust markets. The Board believes that effective communications with bodies such as the Financial Conduct Authority (FCA), the Bank of England (BoE) as well as the UK Treasury helps to deepen the understanding of systemic risks. This, in turn, allows the Company to take appropriate actions to address such risks in meaningful ways.
Examples of issues that Insight has engaged on with regulators during the period include the AIFMD Review, UK EMIR pension fund clearing exemption, Money Market fund related topics, UK funds regime, numerous ESG related consultations, as well as a range of other pertinent issues. In addition to these BAU topics, as a result of the 2022 gilt crisis, Insight also spent ample time engaging with the FCA, the BoE as well as the Central Bank of Ireland. Discussions focused mainly on risk management initiatives pertaining to LDI products. Within these discussions, Insight contributed to potential solutions that could help the industry to be more robust to withstand future yield shocks.
The Board is supportive of Insight participating in various engagements with the FCA on potential new guidance and regulations. Insight typically undertakes gap analysis once new regulations or guidance become available. For example, during the period, the business responded to the FCA’s Discussion Paper on SDR & Investment Labels; designed and received board approval for Insight’s Implementation Plan for the New Consumer Duty provisions; and attended to observations outlined within the FCA’s Firm Evaluation Letter. Similar compliance work was also undertaken for findings flowing from the European Securities and Markets Authority.
Vendors play an instrumental role in Insight’s overall operations. During the period of high market stresses, one area of Insight’s operation that did not perform in line with expectation was the collateral management process, which is outsourced to a service provider. To address deficiencies in this area, successive meetings were held between the vendors’ senior management team and executive members of the Board. To date, notable improvements have already been made to the collateral management process but there is still ongoing collaboration with the vendor to further enhance service levels.
Separately, the Board receives periodic updates on the Company’s onboarding and invoice settlement processes. Recent information provided to the Board shows that BNY Mellon’s Third-Party Governance framework was improving in both these areas. The framework, when first introduced, provided some administrative challenges as new controls and processes were being embedded. However, ongoing collaboration between Insight and BNY Mellon representatives has proved to be beneficial in addressing these issues and although overall performance was not yet at a desired level, clear improvements have been observed in onboarding and invoice settlement activities. The Board will continue to keep this under review with a view to ensure that the business contracts with vendors that can contribute to Insight’s success and ensure that the interests of vendors are adequately addressed, mainly by the means of timely payments for services delivered.
Insight’s Global Outsourcing and Vendor Management Policy incorporates ESG criteria and complies with BNY Mellon’s Supplier Code of Conduct. Said policy reflects issues such as social responsibility, health and safety, human rights, ethics and responsible business practices. Existing vendors that do not meet the required standards risk being removed from Insight’s list of vendors.
Since transitioning colleagues, clients and assets from BNY Mellon’s Fixed Income business into Insight North America LLC (“INA”) during 2021, excellent progress has been made over the course of 2022 in integrating the teams and businesses together. INA is domiciled in the US and is a recognised sister entity within the BNY Mellon Group that endorses the Insight brand but is not a subsidiary of Insight Investment Management Limited. The integration of the new colleagues was supported by the remodelling of existing governance structures to ensure that new colleagues feel part of Insight’s culture and to encourage greater collaboration across the enterprise. A key part of the integration involved considering the views of all colleagues to ensure that their interests and concerns were adequately addressed. The Insight Board continues to take an active interest in the integration process and is kept appraised of key milestones.
Separately, the transition has given Insight critical mass in investment coverage and talent, together with a client footprint from which it can build a genuinely competitive presence for its US fixed income platform. The operational transition made further progress in 2022, with the Taxable Fixed Income and Efficient Beta platforms successfully migrating during the year.
The following changes were made to the structure of Insight’s US investment team in 2022 to cement this progress and support Insight’s ambitious growth aspirations:
All core US Fixed Income are being grouped together under a Head of Core Fixed Income, North America. This includes the US Core and Multi Sector, US Rates and Mortgages, US Insurance and US Investment Grade teams. The Head of Core Fixed Income, North America, who was among the investment professionals that joined Insight as part of the Mellon transition, will have a dual reporting line to Insight’s Chief Investment Officer, Fixed Income and to one of Insight’s two Co-Heads of Fixed Income. This Co-Head of Fixed Income also formally deputises the Chief Investment Officer, Fixed Income’s responsibilities in the US. London based responsibilities remain unchanged with both Co-Heads of Fixed Income, reporting to the Chief Investment Officer, Fixed Income
As a further step towards completion of the transition process the US Muni Bond group will now report to the Chief Investment Officer, Fixed Income.
Insight is committed to gaining a better understanding of the views and expectations from clients that were obtained via the transition. This will allow the Firm to fully replicate its ethos of prioritising clients’ interests regardless of their geographic location. The Board is fully supportive of this initiative and management is encouraged to continue to have due regard to the expectations of clients and other notable stakeholders (such as regulators and local communities), to help facilitate the path to a sustainable business. During 2022, Insight continued to experience a favourable client retention rate and experienced notable client wins, thus reflecting the extensive work carried out to date in understanding clients’ needs and objectives.
Acting fairly between members of the company in a Shareholder relationship
Insight is a wholly owned subsidiary within the BNY Mellon group governed by its Board. The Company maintains an open relationship with BNY Mellon, where ideas and strategic objectives are exchanged, ensuring the Board members remain aligned with the strategic objectives and corporate values of its shareholder whenever appropriate. Across all decisions, the Insight Board is fully committed at the same time to ensuring due regard to the interest of other stakeholders as outlined above.