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Lombard Odier

PRI reporting framework 2020

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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
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)

14.3. Additional information.[OPTIONAL]

The above mentioned figures are reflective of our asset management activities.


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
Corporate (financial)
Corporate (non-financial)
Individual/Internal staff engagements
Collaborative engagements
Service provider engagements

15.2. Indicate how your organisation prioritises engagements with issuers.

Select all that apply
Corporate (financial)
Corporate (non-financial)
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
Corporate (financial)
Corporate (non-financial)
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
Corporate (financial)
Corporate (non-financial)
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
Corporate (financial)
Corporate (non-financial)
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]

The above mentioned figures are reflective of our asset management activities.


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.

16.3. Additional information [OPTIONAL]

During 2019 we published our first engagement policy for internally managed funds. This policy applies to all asset classes managed by LOIM, which embodies and gives shape to our stewardship approach and expectations for the companies we invest in. It also discusses how we are likely to approach and react when faced with different ESG and sustainability considerations relating to companies business models/activities and business practices. More importantly, during 2019, Lombard Odier created the Sustainable Investment Research, Strategy & Stewardship team (SIRSS). The SIRSS team is responsible for identifying, analysing and mapping material sustainability challenges that are likely to affect the long-term viability of companies' business activities and models. The team maps the exposure of different sectors and industries to sustainability challenges and companies' susceptibility to those challenges, working in close collaboration with the investment teams and the ESG team. The SIRSS team is also responsible for carrying out our strategic objectives on stewardship, through engagement and voting. It engages and collaborates with investee companies to promote sustainable business practices and models that enhance the long-term value of our clients' assets. (When it comes to exercising our equity voting rights, we will look to form an aggregated view across our asset classes as much as possible. As such, our voting is often reflective of the engagement views and objectives of our fixed income teams.)

For our internally managed assets, our investment teams engage in frequent dialogue with companies based upon the intelligence and analysis gained from our SIRSS team and ESG Solutions team.  We address issues that have a financially material impact through engagement. We will enter into a dialogue with the company to test and challenge its approach to the sustainability factors we think are most material to its prospects and will seek to influence its sustainability positioning in areas we think there are weaknesses or room for improvement.

We place great importance on being active stewards with debt issuers, and believe the characteristics of corporate credit lend themselves especially well to stewardship. In particular, engaging in dialogue with companies is critical to assessing creditworthiness because it improves our understanding of the issuer’s risk profile.

Our dialogue with companies can be undertaken in a variety of ways including correspondence through email and more formal letters, one-to-one calls with the Chairman, the Senior Non-Executive Director, the Chair of the Remuneration, Sustainability, Nomination Committee, Sustainability Officers, Investor Relations, CFO, CEO, periodic investor calls/meetings, during pre-offering capital markets roadshows as well as through collective/coalition investor initiatives. Our range of tools also includes press campaigns, attending AGMs, attending and speaking at AGMs, filing shareholder proposals and divesting.

We have designed our engagement to:

  • Inform our analysis and enhance our risk / return calibration;
  • Encourage companies towards more sustainable business models and practices (particularly in relation to corporate governance);
  • Provide disclosures of the material, decision-useful types of information that we believe to be highly investment relevant.

During 2019, Lombard Odier became a supporter of the final recommendations of the Taskforce for Climate-related Financial Disclosure (TCFD). The TCFD recommendations will improve our ability to analyse material risks companies face and how well they are positioned for the transition to a decarbonised economy.

We are active participants in collaborations designed to address systemic, sector and company level issues. Lombard Odier supports UNPRI collaborative initiatives and is actively involved with local, national and international regulatory and political authorities in order to promote a sustainable finance framework.

During 2019 we also became a signatory of the Global Investor Statement on Climate Change 2019 and became members of the Energy Transitions Commission.

During 2020, we intend to formalise our engagement policy for all internally managed assets, including those of our private client unit.

This information is reflective of our asset management activities.


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