This report shows public data only. Is this your organisation? If so, login here to view your full report.

Schroders

PRI reporting framework 2019

Export Public Responses
Pdf-img

You are in Direct - Fixed Income » Fixed income - Engagement

Fixed income - Engagement

FI 14. Engagement overview and coverage

14.1. Indicate the proportion of your fixed income assets on which you engage. Please exclude any engagements carried out solely in your capacity as a shareholder.

Category
Proportion of assets
SSA

14.2. Indicate your motivations for conducting engagement (SSA fixed income assets).

Corporate (financial)

14.2. Indicate your motivations for conducting engagement (Corporate, Financial fixed income assets)

Corporate (non-financial)

14.2. Indicate your motivations for conducting engagement (Corporate, non-financial fixed income assets)

Securitised

14.2. Indicate your motivations for conducting engagement (Securitised fixed income assets).

14.3. Additional information.[OPTIONAL]

Credit: We see ESG as one of the largest nodes of business risk for the issuers we monitor, and therefore oit is a significant component of conversations we have with management.  We typically engage with companies to get a much clearer understanding of how the company operates and is managed, and to identify how management anticipate and plan for risk.   We utilise automated company and industry data to monitor trends.  As we represent bondholders, we see governance as critical and use these meetings to discuss concerns and gain a much clearer picture of the business and the organisation.  We not only engage to gather information, but company meetings are also an important way of bringing management attention to any concerns.  During 2018, Schroders credit analysts held over 800 meetings with debt issuers, either in person or by telephone. Credit analysts also attended meetings jointly with Schroders equity analysts.

In 2018 we used data produced by our Data Insights Until on automated emission data reporting, web based brand perception data, etc to engage on specific performance issues with management.   We will also undertake reactive engagement as a result of any negative incident involving a company, in order to understand why it may have occurred, the actions the company is taking as a result, and what the current and future investment risks may be.  Often we are able to pick up on an engagement where divestment by our equity teams has led to an engagement going cold, this can be especially helpful when companies are looking to issue new debt.

Engagement with issuers on deal structures has intensified in the last year, notably so in the High Yield space across a number of issuers. In the Aerospace and Communications sectors we were involved in discussing deal structure with sponsors and company management to ensure that deal structure aligned the long-term financing needs of the companies with the long term investment horizons of our portfolios.

Sovereign

For Sovereign Debt a key part of our Emerging Market investment process involved on the ground research trips by Fund Managers in these regions. During these we will engage with policymakers, governments, opposition and NGOs. These are instrumental in delivering insights in what is actually happening on the ground. Occasionally we will raise controversial issues with governments, for example the treatment of foreign labour, where we consider them to be of long term importance. This is to both assess their handling of a situation and to encourage improvement.

Securitised

Within Securitised, we are focused on if the loan made in accordance with all consumer and other applicable laws and if there are rigorous standards to assure compliance. Specifically, within the private debt space we encourage the loan to be structured accordance with state and local laws via annual state law survey.

 


FI 15. Engagement method

New selection options have been added to this indicator. Please review your prefilled responses carefully.

15.1. Indicate how you typically engage with issuers as a fixed income investor, or as both a fixed income and listed equity investor. (Please do not include engagements where you are both a bondholder and shareholder but engage as a listed equity investor only.)

Select all that apply
Type of engagement
SSA
Corporate (financial)
Corporate (non-financial)
Securitised
Individual/Internal staff engagements
Collaborative engagements
Service provider engagements

15.2. Indicate how your organisation prioritises engagements with issuers.

Select all that apply
SSA
Corporate (financial)
Corporate (non-financial)
Securitised
Size of holdings
Credit quality of the issuer
Duration of holdings
Quality of transparency on ESG
Specific markets and/or sectors
Specific ESG themes
Issuers in the lowest ranks of ESG benchmarks
Issuers in the highest ranks of ESG benchmarks
Specific issues considered priorities for the investor based on input from clients and beneficiaries
Other

15.3. Indicate when your organisation conducts engagements with issuers.

Select all that apply
SSA
Corporate (financial)
Corporate (non-financial)
Securitised
We engage pre-investment.
We engage post-investment.
We engage proactively in anticipation of specific ESG risks and/or opportunities.
We engage in reaction to ESG issues that have already affected the issuer.
We engage prior to ESG-related divestments.
Other, describe

15.4. Indicate what your organisation conducts engagements with issuers on.

Select all that apply
SSA
Corporate (financial)
Corporate (non-financial)
Securitised
We engage on ESG risks and opportunities affecting a specific bond issuer or its issuer.
We engage on ESG risks and opportunities affecting the entire industry or region that the issuer belongs to.
We engage on specific ESG themes across issuers and industries (e.g., human rights).
Other, describe

15.5. Indicate how your organisation ensures that information and insights collected through engagement can feed into the investment decision-making process.

Select all that apply
SSA
Corporate (financial)
Corporate (non-financial)
Securitised
Ensuring regular cross-team meetings and presentations.
Sharing engagement data across platforms that is accessible to ESG and investment teams.
Encouraging ESG and investment teams to join engagement meetings and roadshows.
Delegating some engagement dialogue to portfolio managers/credit analysts.
Involving portfolio managers when defining an engagement programme and developing engagement decisions.
Establishing mechanisms to rebalance portfolio holdings based on levels of interaction and outcomes of engagements.
Considering active ownership as a mechanism to assess potential future investments.
Other, describe
We do not ensure that information and insights collected through engagement can feed into the investment decision-making process.

15.6. Additional information.[OPTIONAL]

As an integrated equity and fixed income fund manager our investment processes benefit from joint engagement with companies. This is often alongside ESG specialists and equity analysts. We engage together on issues that are material to investors across the capital structure. We push for improved disclosure and evidence that ESG risk and opportunities are being managed effectively. It also helps companies that a consistent message on the importance of ESG from different stakeholders is being delivered. We will engage collectively. For example we have signed a number of letters calling on policymakers to tackle climate change which we see as a significant risk. We are also members of the Credit Round Table.  Formed in 2007 by a group of large institutional fixed income managers. one of the CRT’s objectives is to improve the corporate bond market’s efficiency through increased transparency specifically as it relates to issuer communication.


FI 16. Engagement policy disclosure

16.1. Indicate if your publicly available policy documents explicitly refer to fixed income engagement separately from engagements in relation to other asset classes.

16.2. Please attach or provide a URL to your fixed income engagement policy document. [Optional]

16.3. Additional information [OPTIONAL]

We have been explicitly incorporating ESG factors into our fixed income credit analysis since we published our first responsible investment Fixed Income ESG Policy statement in 2011. As we look back on the work that we have done, it becomes clear that the issues we analyse, the tools that we use and the questions that we ask of companies are not very different from that of our equity colleagues. It has been through the combined efforts of our fixed income, equity and Sustainable Investment teams that we have been able to effectively interact with companies, stimulating awareness of and highlighting potential solutions for key ESG issues.  Since 2017 have one combined ESG policy and this unified and consistent policy encourages the routing of information and insights across our network, which ensures we can continue to protect and grow our client capital.


Top