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Loomis, Sayles & Company, L.P.

PRI reporting framework 2020

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]

Our Securitized Team had 95 documented engagements with issuers during the course of 2019. A summary of these engagements is below:

Consumer ABS: Issuer awareness of ESG increased as compared to 2018.  Still, many are still trying to understand the aspects of ESG and how to implement it for securitization. Overall, governance was the dominant topic of discussion across most of the meetings, followed by social (i.e. fair lending practices).

Commercial ABS: Given the variety of asset classes contained within Commercial ABS, we continue to receive mixed responses.  Most ESG responses have been from issuers who have environmental / green initiatives within their workplaces. Nevertheless, while not identified specifically as governance issues, standard discussions included deal structure and company governance issue, though as stated they were not specifically discussed with reference to good governance practices.

Residential Real Estate: The issuers with whom we have conferred have not addressed ESG specifically within their activities, and have not heard the question often.  The GSEs are a notable exception, with significant economic concessions being made to offer MWOB (minority-women-owned-business), auctioning of pools of RPL (re-performing loans) and NPL (non-performing loans).

Commercial Real Estate: The CMBS Issuer is a trust and has no policies. We have spoken with various underwriters and they recognize that for certain assets (Single-Asset Single-Borrower transactions), LEED certification (energy efficiency, etc.) adds to the value of the asset. Several of the mortgage REITs have awareness of ESG funds and are crafting policies.  But economic factors (in the context of fiduciary duty to their owners) are the driving consideration. The rating agencies are looking into ESG scoring for CMBS but most expect managers and borrowers will develop their own policies.

 


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

If ‘other’ has been selected, please give a description

We engage on specific ESG factors that we believe have a material impact on the credit profile.  

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]

At Loomis Sayles, we have the strategic decision to integrate and embed our ESG engagement and analysis within our large and experienced team of fundamental credit and sovereign analysts, instead of creating a separate ESG group of analysts.  We believe this structure helps to effectively and authentically integrate the key material ESG issues within research and portfolio management.  Our fundamental analysts are supported by the Senior Management ESG Committee, which is comprised of senior members across the firm, as well as our ESG Committee, consisting of a full time Director of ESG (appointed in 2018), as well as key investment, marketing, legal, technology and compliance representatives across the firm.  Our ESG Committee has been in place since 2012, and we continue to enhance the process by adding subcommittees such as in marketing, technology, etc.  We also have an Advisory Board that includes members of our executive team.  All of our fixed income assets are included within our ESG incorporation stategy. 


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]

URL

Attach document


16.3. Additional information [OPTIONAL]


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