We operate in an environment that is continually changing and subject to vast information flows. As a result, we remain alive to the prospect that any company we invest in may present specific issues that require our assessment. There are also times when we are required to support companies or accommodate requests for engagement from management teams. Consequently, engagement decisions are taken on a case-by-case basis, and with due consideration for:
- Client-sponsored initiatives or requests.
- Collaborative activity.
- The size of holding and overall weighting
- Whether the issuer is a new position.
Below is a representative list of the types of themes that might trigger an engagement:
- Routine monitoring or relationship meetings;
- Mergers and acquisitions activity;
- Corporate strategy, risk appetite and culture;
- Performance and financial issues;
- Stakeholder agenda (environment, employee and customers);
- Political risk (including sanctions);
- Regulation, conduct or cyber security;
- Climate-related risks and strategies;
- Reported controversies relating to investee companies.
The fixed income team engages with hundreds of potential investee companies and existing holdings via deal roadshows each year, attending meetings and calls with company management teams where this option is available to us. ESG factors are regularly included within this dialogue. The level of openness to engagement with bondholders varies significantly across different geographies and asset classes, but we will always seek to engage where we believe this would be beneficial to our clients. The sovereign analysts regularly conduct research trips to engage with government departments, local corporates, policy makers, NGOs and multilateral institutions to understand credit and macro risks, including ESG factors. This applies to both G10 and emerging sovereigns.
Measuring engagement outcomes is complex as the realisation of an engagement can be hard to measure or attribute. Furthermore, outcomes are often a long-term consideration and change may be the result of months if not years of confidential dialogue. The CIO Office plays an oversight role in this regard, assessing the effectiveness of our fund managers’ engagement with investee companies. The CIO’s Office looks to understand how the individual strategy has executed and managed their own ESG priorities, including via engagement.
The fund managers and credit analysts are supported by Jupiter’s GS team who periodically provide input both in identifying situations where engagement may be beneficial and suggested approaches to dialogue with companies, drawing on third party data and their experience of engaging with boards and management of investee companies.
Specific stewardship related engagement is recorded on an internal database. This is used to track the progress of dialogue and assists with the scheduling and identification of future engagement. The database is also used to facilitate engagement reporting to institutional clients. Engagement is reviewed by the Stewardship Committee to examine trends and communicate relevant developments.
To provide additional oversight, Jupiter’s Stewardship Committee provides a platform to co-ordinate and review engagement across the different asset classes in which Jupiter invests and to debate whether we are receiving the desired response from companies. Chaired by the CIO, the committee also considers the external ESG landscape and trends in the wider investment industry and public policy. Other committee members include the Head of Governance and Sustainability, fund manager representatives from our equity, fixed income and fund-of-fund strategies, as well as governance and sustainability specialists. The Vice Chairman of Jupiter Fund Management plc (‘JFM’) is also a member which strengthens the alignment of these considerations across the organisation and improves the communication of stewardship matters to the JFM plc Board.
Jupiter is open to working alongside other organisations on both policy and company specific matters. As bondholders, this avenue is available to us and we will consider working alongside other bondholders on a case by case basis, where this is deemed in the interest of clients. In some circumstances collaboration with other investors may be the most productive way to engage with investee companies. This could be in situations where independent escalation has not produced a desirable outcome or during times of significant corporate or economic stress. In doing so, Jupiter gives due regard to its policies concerning governance and engagement.
Potential considerations which govern collective dialogue on company specific issues are diverse. Jupiter may consider joint engagement in the following circumstances:
- Concern over decisions relating to M&A activity;
- Issues with company leadership or board members;
- Concern over remuneration;
- Concern over strategy;
- Where there is difficulty accessing companies in certain markets.
- In a bondholder context, restructurings and credit events often entail a collective response from bondholders. We are open to and participate in such arrangements where this is deemed in the interest of our clients.
The above framework is not exhaustive and there may be other occasions in which Jupiter may seek to act collectively.
Collective engagement can be an effective pathway to leverage influence with companies to help reach desirable outcomes. Our GS Team coordinate engagement with other institutions and our partner organisations, such as the Investor Forum and IIGCC. We have successfully worked with our peers for the shared benefit of our clients and support the principle of collective engagement. We remain open for dialogue with external parties and consider subsequent actions on a case by case basis. The team also regularly engage with policy makers and industry bodies to inform our approach to developments in best practice and the broadening stewardship agenda.