Engagement case studies

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Stewardship: fixed income

IF ESG, STRATEGIC AND FINANCIAL RISKS ARE IDENTIFIED THROUGH A DUE DILIGENCE PROCESS, OUR ANALYSTS ARE EXPECTED TO ENGAGE IN A DIALOGUE WITH COMPANY MANAGEMENT. AS A LARGE INSTITUTIONAL INVESTOR, INSIGHT HAS GOOD ACCESS TO AND REGULARLY MEETS WITH MANAGEMENT TO DISCUSS MATTERS RELATING TO STRATEGY, PERFORMANCE, AND FINANCIAL POLICY.

Material governance issues are regularly discussed and material environmental and social issues are covered when relevant. This is because we consider ESG risks alongside other factors when assessing a company's financial strength, strategic direction, overall quality of management, and the market valuation of its securities. We also monitor changes, particularly downgrades, to key risk scores each quarter.

Insight’s credit analysts meet all companies before investing in any bonds or loans they have issued or are about to issue. We hold regular conversations with companies through a variety of methods, including face-to-face meetings, investor conferences, conference calls, emails and letter-writing. The frequency of our communication with issuers depends on the risks identified during our research process.

Company meetings are undertaken by our in-house analysts. This is because we consider engagement to have material financial implications and is best understood within the context of the wider investment process. We have internal systems to track and organise our company meeting activity.

Escalating engagement activities will occur on a case-by-case basis. From a risk perspective, if we are not satisfied with a company’s management of risk (including ESG-related risks), we are prepared to sell holdings or move to an underweight position. In some portfolios that will not be possible because of mandate restrictions. In such situations, we discuss potential investment actions with clients (which may include take-no-action, sell holdings, or continue monitoring).

For 2016, our ESG engagement activities are shown in the graphic below.

Dialogue with issuer management in 2016

Dialogue with issuer management in 2016

These examples are shown to illustrate the process and considerations and should not be construed as investment recommendation advice. 

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