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

Jupiter Asset Management

PRI reporting framework 2020

Export Public Responses
Pdf-img

You are in Direct - Fixed Income » Outputs and outcomes

Outputs and outcomes

FI 17. Financial/ESG performance

17.1. Indicate whether your organisation measures how your incorporation of ESG analysis in fixed income has affected investment outcomes and/or performance.

Select all that apply
SSA
Corporate (financial)
Corporate (non-financial)
Securitised
We measure whether incorporating ESG impacts portfolio risk.
We measure whether incorporating ESG impacts portfolio returns.
We measure the ESG performance/profile of portfolios (relative to the benchmark).
None of the above

17.2. Describe how your organisation measures how your incorporation of ESG analysis in fixed income has affected investment outcomes and/or ESG performance. [OPTIONAL]

Individual investment strategies, the GS team and the Stewardship Committee all play a role in assessing outcomes of our stewardship activities. This refers to examining whether we have been successful in meeting our engagement objectives. These matters will be reported to clients and also feature within our public disclosure.

While we believe that ESG factors can have a material impact on bond prices over time we do not systematically measure the contribution of our ESG analysis per se to investment performance. The link between ESG analysis and investment outcomes is challenging to assess because it is unclear how best to isolate and measure the return generated from integrating ESG analysis from other types of analysis applied by the team. The heterogenous nature of ESG factors and the challenge of making comparisons across different sectors, geographies and asset classes further complicate the measurement of their impact. In order to further develop our approach to ESG portfolio analysis, our Data Science team have built a data portal accessible by all investment staff. The intention is to further develop this tool to enable comparison of our portfolios' ESG profiles (using third party ESG ratings data) with those of comparable benchmarks.  

17.3. Additional information.[OPTIONAL]


FI 18. Examples - ESG incorporation or engagement

18.1. Provide examples of how your incorporation of ESG analysis and/or your engagement of issuers has affected your fixed income investment outcomes during the reporting year.

ESG issue and explanation

Governance - Risk Oversight

The initial trigger for this engagement was to assess the appointment process for the recently-appointed Board Chair and to consider Board oversight of his time commitments given two other external Chairmanships. More broadly, the meeting was an opportunity as bondholders for general engagement on group governance and culture in line with new guidance in the UK Stewardship Code on investor responsibilities to monitor and engage across all asset classes. The group is known for its conservative culture and risk tolerance and our engagement served to gain assurance as bondholders to ensure that this was still the case. It also provided insights into specific governance areas of buildings societies, such as the level of engagement of members and borrowers who occupy the role played by shareholders at listed companies. Additionally, the group had recently announced that the CEO would depart and so this meeting was a chance to explore succession arrangements. The SID also serves as RemCo Chair and we discussed the Board’s approach to executive and employee remuneration, the degree of alignment this provides between management and bondholders and how staff are incentivized in a far lower quantum environment than in the listed UK banking sector.

Impact on investment decision or performance

Overall we were satisfied with the Board's oversight of the above matters and considered that the investment case for our bondholding remained in place, we have since remained invested in the group.

ESG issue and explanation

Governance - Balance Sheet 

We engaged with the management of an investee company as we had concerns regarding the management team’s approach to balance sheet management. We believed there was a disconnect between management’s risk appetite for increased debt and fixed income investors’ expectations that the company should deleverage. We met the management and made clear our views to them.

Impact on investment decision or performance

Management subsequently altered strategy and started to deleverage the business. We remained invested.

ESG issue and explanation

Environment - Climate Change 

We co-signed a collective investor statement on the need for continued regulation of methane in the oil & gas industry, which was sent to thirty-five upstream and mid-stream oil & gas companies, including several in which we are bondholders. In total 140 institutions including members of the Institutional Investors Group on Climate Change (IIGCC) representing over $5 trillion in AUM were signatories. The statement was published in response to concerns regarding the Environmental Protection Agency’s (EPA) proposed rollback of oil and gas methane emission regulations. We considered the case put forward by the proponents and agree with the central point that the long-term role of oil and gas in the global energy mix will be influenced by the extent to which the oil and gas industry reduces its emissions of methane, a potent greenhouse gas.

Impact on investment decision or performance

To date several of the companies have issued public responses stating their support for the direct regulation of methane emissions by the EPA. We continue to monitor the outcome of these regulatory developments.

ESG issue and explanation

General ESG

We are long-term bondholders in the group and arranged a meeting with its treasury representatives. As well as discussing financial matters such as the composition of the group's balance sheet and the performance of the group's food retail and department store businesses, the meeting also offered an opportunity to review the governance arrangements at the partnership, which is owned by its employees. An internal review of group governance arrangements was recently concluded and this resulted in a number of changes, including the creation of a formal nominations committee and simplifying oversight structures for risk, CSR, health and safety and employee wellbeing. The changes coincided with the selection of an external candidate to be the new Partnership Chairman, the first outside appointment to the role in the Partnership's history. We discussed the rationale for the appointment and sought practical examples of how the leadership decision making process operates in practice. Our dialogue also explored the partnership's culture and workforce practices, including its remuneration structures and pension provisions, in the context both of the Partnership's recognized status as a living wage employer but also the process of headcount reduction which has been undertaken in recent years amid challenging business environment.

Impact on investment decision or performance

We gained insights into the changes in the partnership’s governance structure and concluded that we should continue to hold our position in the company’s bonds despite headwinds to the department store business.

ESG issue and explanation

General ESG; Sustainability Reporting; Climate Change

This meeting with the senior management team including the Executive Chairman provided an opportunity for an update on operational and strategic matters as well as ESG topics. The latter included the group's decision to publish an updated sustainability report in 2019, its ongoing approach to community relations in the Niger Delta, and the targets the group has set itself to reduce flaring at its upstream operations in order to bring down its operational carbon emissions.

Impact on investment decision or performance

We gained insights into the group’s ESG approach and strategy and remained invested.

18.2. Additional information.


Top