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Loomis, Sayles & Company, L.P.

PRI reporting framework 2020

You are in Direct - Listed Equity Active Ownership » Outputs and outcomes

Outputs and outcomes

LEA 09. Number of companies engaged with, intensity of engagement and effort

Indicate the proportion of companies in your listed equities portfolio with which your organisation engaged during the reporting year.
We did not complete any engagements in the reporting year.

Number of companies engaged

(avoid double counting, see explanatory notes)

Proportion of companies engaged with, out of total listed equities portfolio

Individual / Internal staff engagements

305
30

Collaborative engagements

1
1

09.2. Indicate the breakdown of engagements conducted within the reporting year by the number of interactions (including interactions made on your behalf).

No. of interactions with a company
% of engagements
One interaction
2 to 3 interactions
More than 3 interactions
Total
100%

09.3. Indicate the percentage of your collaborative engagements in which you were the leading organisation during the reporting year.

Type of engagement

% leading role
  Collaborative engagements

09.5. Additional information. [Optional]

For LEA 9.2: Our equity teams engage frequently with companies and track their engagement in our ESG Engagement Database.  Each analyst documents whenever they engage with a company, and whether they engaged on an E, S, or G topic.  


LEA 10. Engagement methods

10.1. Indicate which of the following your engagement involved.

10.2. Additional information. [Optional]

Our equity investment teams have frequent meetings with senior management of the companies that they own. These interactions take the form of meetings at our offices, visits to the operational facilities of the businesses, or sell-side roadshow meetings to visit multiple companies in the same industry. They also may have frequent calls with the management or investor relations teams.

 


LEA 11. Examples of ESG engagements

11.1. Provide examples of the engagements that your organisation or your service provider carried out during the reporting year.

ESG Topic
General ESG|Diversity|Water risks
Conducted by
Objectives

We have actively engaged with management to understand their environmental water strategies and to increase diversity in the leadership team.

Scope and Process

We conducted due diligence on a global life sciences company for potential investment. During our engagement with company management, we conducted our quality assessment. We found the company’s value proposition attractive: reduction of operating costs through environmental efficiencies. Offerings include water analysis and treatment for municipal drinking water plants. These services have strong growth particularly in emerging markets where water quality is an issue. Our analyst also toured a manufacturing facility and met with leaders across the Environmental and Applied Solutions segment.

All six members of the executive team - CEO, CFO, former CFO, and three division presidents - are male and white. The company has begun to organize support groups and formal mentorship programs for emerging women and minority leaders. Progress is being made; for example, in the Environmental and Applied Solutions segment, while the group head is still male, more than half of his direct reports, the group CFO, Chief Legal Counsel, and multiple Vice Presidents, are women. We are monitoring these efforts to ensure that they increase diversity in the company's executive rank in coming years. 

We invested in the company and continue to engage with management on its environmental business and diversity.

Outcomes
ESG Topic
Diversity|Other governance
Conducted by
Objectives

We have held this global life insurance company stock for several years. We regularly meet with the chairman, either in person or on a one-on-one video conference, to engage on governance and social issues.

Scope and Process

Our team's two portfolio managers have joined these meetings.  Our most recent meeting with the Chairman was in November 2019, and we discussed CEO succession planning, efforts to improve board and senior management racial and gender diversity.  We also sought an understanding of how the company is integrating ESG principles in its investment portfolio, and how it is achieving its social objectives via urban regeneration and the financing of low-income housing. 

Outcomes
ESG Topic
Executive Remuneration|Company leadership issues|General ESG
Conducted by
Objectives

The financial terms of bank mergers are critical to understand in order to assess if the new combination remains an attractive investment for the portfolio, and is being managed in a way that is aligned with our clients' best interests.

Scope and Process

During 2019, this investment team owned four banking companies, and each proposed an equity-funded acquisition. For each of the mergers, we engaged with the companies both after the proposed merger agreement announcement and before the proxy vote. We engaged with the companies to understand the terms of the deal (dilution, change of control etc) and which management team will be leading the new entity as these decisions will impact credit/loan underwriting standards, balance sheet management, employee staffing etc.

Our engagement objectives focused on understanding how the deal came together, and the rationale for the combinations, for example whether the combination of the two companies will result in a better investment for shareholders.  We also engage to understand and track the management team's execution plan, which includes gaining insight into the time frame for changes/integration, proposed cost savings, surviving culture, compensation plans, balance sheet and business plan. We speak directly to the company's senior management team, and they are aware of our concerns about merger risks and governance challenges. 

 

Outcomes
ESG Topic
Company leadership issues|Other governance
Conducted by
Objectives

We engaged with the management team of a very large global financial market structure institution to better understand their governance strategy related to acquisitions.

Scope and Process

The proposed acquisition was announced in August of 2019, and members of the investment team visited the company's London headquarters later that month to discuss the rationale for the acquisition with its investor relations team. After their conversation with the management team, they concluded that the acquisition will provide further growth opportunities, and will also increase its proportion of high-value financial data revenues and improve regional diversification, all of which should result in meaningful valuation expansion and benefits to shareholders.

 

Outcomes
ESG Topic
Executive Remuneration|Other governance
Conducted by
Objectives

Understand management's strategy related to option vesting and board membership.

Scope and Process

Our portfolio manager spoke with the CEO to understand the company’s perspective on option vesting issues, and board membership, prior to an annual shareholders' meeting. After discussion, we decided to vote against management's recommendation. Ultimately, management was successful. After the vote was completed, the portfolio manager continued to discuss the issues with the CEO, who shared the company’s strategy related to future board changes. We believe this continued governance-related engagement will help to ensure that we are able to have a positive impact over the long term.

 

Outcomes
ESG Topic
Climate Change|General ESG|Sustainability reporting
Conducted by
Objectives

Our engagement objective with this company was to understand and learn more about their well-regarded company in terms of sustainability.

Scope and Process

In November 2019, an analyst from our investment team visited the headquarters of this consumer goods company. The head of sustainability and packaging at the consumer goods company accompanied our analyst on a research and development facility tour.  We interacted with senior leaders in charge of packaging technology and sustainable sourcing, and they showed us how they cooperate with various NGOs to solve environmental issues.   We also met with the CEO and CFO several times during the year (in person at our firm, and twice at conferences), visited headquarters to discuss ESG and sustainability, and spoke with the investment relations team quarterly.

We learned about the company's raw material sourcing, packing efforts to reduce carbon footprint an increase recylcable packing, and transition to sustainable palm oil.

 

Outcomes

11.2. Additional information. [Optional]


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