Engagement at TwentyFour
We believe engagement should be a constructive, active dialogue between investors and companies on all aspects of their ESG performance.
While fixed income investors do not have voting rights in the way shareholders do, larger firms typically issue bonds multiple times a year, which puts bondholders in a strong position to be able to influence corporate policy by engaging with management on an ongoing basis.
At TwentyFour we aim to engage regularly with the management of every issuer whose bonds we hold in our portfolios, to better understand their ESG strengths and weaknesses, monitor their direction of travel, and overall encourage better ESG practices.
As part of our commitment to the UK Stewardship Code we publish a quarterly summary of our engagements with bond issuers, along with details of any resulting investment decisions, at the bottom of this page.
ESG investing is a fast-evolving discipline, and approaches can vary markedly from manager to manager. We therefore believe this makes the quality of the ESG data used in different scoring systems critical to outcomes, and even more so in fixed income, where we think data provision is improving but still well behind the level we see in the public equity markets. Because of this, we regularly engage with our external data providers and push them to extend their output.
Engagement in practice
We take our stewardship responsibilities seriously and look to always act in the best interests of our clients. We conduct a significant amount of due diligence on issuers with whom we invest, which enables us to avoid companies we believe do not meet our high standards in strategy, performance and/or ESG factors.
The general principals of our engagements are not fund or geography specific. Global fixed income markets are large, diverse, and complex. As such our approach is designed to retain a dynamic approach to serving our clients’ needs. In general we will engage on any topic as and when we feel it is in our clients’ interests to do so.
Investment or ESG issues can arise post-investment, and where we are concerned about specific ESG matters, management behaviour or treatment of bondholders, the portfolio managers will engage with the appropriate senior management or board member of the company involved. Within our proprietary ESG model, housed in our Observatory portfolio management system, we have a template which enables portfolio managers to log any company engagement by the following steps:
- Nature of the concern
- Desired outcome
- Engagement
- Response
- Action/outcome
Our system is also able to capture and log any associated email correspondence, write-up, blog or any other related documents to build a detailed history of our engagement with every bond issuer.
We generally keep such discussions private as we believe better outcomes can occur this way, but we have on occasion published blogs discussing issues that we have found difficult to resolve and we felt deserved to be brought to our clients’ or the broader market’s attention.
For example:
- Coronavirus Predatory Pricing is an ESG Red Flag
- Green AT1 Raises More Questions Than Answers
- Do Green Bonds Work for Investors
Generally, if we have not been able to resolve an issue satisfactorily, we would not invest in bonds issued by those companies, however we would continue dialogue to ensure, as far as possible, the company in question understands why we are not investing in its bonds and that we are kept up to date with any developments including changes in management behaviours. If we are already invested in the bonds, it is possible the matter will result in us exiting the investment, at which point transparency may be delayed to avoid compromising the interests of our clients.
Case Studies
Recent Engagements
As a signatory to the existing FRC UK Stewardship Code we publish quarterly on our website the following engagement information:
Q3 2025
89
Number of Borrower meetings / updates
10
Number of corporate actions
19 (E), 6 (S), 7 (G)
Summary of Corporate engagements
Sample Examples of ESG driven investment decisions
Barclays (BACR)
Issue
We reached out to Barclays for a call to understand in more detail their decision to exit the Net Zero Banking Alliance (NZBA). Importantly we want to understand whether this marks a departure from their NZ targets set under the alliance.
Response
Management reiterated that their targets set under the alliance remain unchanged. They believe that, following the withdrawal of several Wall Street and European banks, the alliance has lost much of its relevance and influence. While they were not directly subjected to political pressure, it did play a role in their decision, as they sought to mitigate the risk of becoming a potential target by remaining in the group.
They emphasised that their US business is meaningful, and that their decision aligns with what we have heard from peers. The alliance was originally established primarily for knowledge sharing; however, since banks have since built their own internal teams, that purpose has largely run its course. They never viewed the alliance as a permanent structure.
Management stressed that membership in the alliance had not constrained their activities, and therefore they do not expect any change in their lending approach.
Action
Overall, we see that their message is consistent with peers, and they should not be considered an outlier. We remain comfortable with their commitment to stated targets and will continue to monitor for any changes.
NextEra (NEE)
Issue
We engaged with NextEra, an electric power and energy infrastructure company, to assess their alignment with the Paris-Aligned Benchmarks (PABs), to understand any recent changes in their investment approach toward renewables and fossil fuels in light of the shift in the current administration, and discuss their remaining coal-fired power generation exposure.
Response
NextEra reaffirmed its commitment to net-zero carbon emissions across its operations by 2045, despite the policy shift under the new US administration. The company outlined its interim reduction target of 70% by 2025, 82% by 2030, 87% by 2035, and 94% by 2040 (2005 baseline) achieved through solar, wind, storage, and green hydrogen.
Despite the new administration’s pro-fossil stance and skepticism toward renewables, management stressed there has been no change in strategy, highlighting that renewables remain the lowest-cost and most reliable long-term option. However, they have exited offshore wind due to halted federal permitting.
Management emphasised a disciplined, long-term approach not tied to political cycles. New fossil projects are viewed as uneconomic compared with renewables, with gas further constrained by supply chain bottlenecks, such as a four-year wait for turbines. Coal investment remains firmly off the table, with both economics and viability ruled out. The company is progressing with the decommissioning of its small remaining coal fleet, underscoring its strategic shift toward a cleaner generation mix.
Regarding PAB alignment, management stated that compliance information is explicitly disclosed. We also asked whether the company intends to commit to Science-Based Targets initiative (SBTi) validation, and we plan to follow up on this in future engagements. Given the current US political backdrop, management suggested that such commitments may face external headwinds.
Action
This was considered a constructive engagement. We were encouraged by the company’s sustained commitment to renewables, its clear stance against coal and new fossil investments, and its transparency regarding the impact of federal policy, particularly the halt to offshore wind. We will continue to monitor progress toward its net-zero targets.
Urbaser (URBASR)
Issue
Urbaser, a Spanish waste management specialist, launched a €1bn payment-in-kind (PIK) toggle note to fund a dividend to its owner, Platinum Equity, just six weeks after issuing a Senior Secured debt package to part-fund an additional €1bn of dividends. The deal proved controversial since it significantly weakened the balance sheet shortly after the previous deal, despite no warning for investors who bought into the Senior Secured notes.
Response
We participated in a small groupholder meeting with Urbaser’s management team and a representative of Platinum Equity, the private equity owner of Urbaser, to voice our concerns and highlight that we viewed the new dividend issuance as overly aggressive. Management claimed they were confident the business could withstand the additional debt burden, given its strong recent financial performance and robust industry outlook.
Action
Although we don't expect Urbaser to encounter operational trouble in the near term, Platinum Equity's overly aggressive approach made us uncomfortable holding the name. We sold the bonds opportunistically and will exercise caution in any future Platinum Equity deals. We also published a blog discussing how transactions such as Urbaser’s erode credit quality and increase systemic leverage, as evidenced by both S&P and Moody’s immediately downgrading Urbaser’s senior notes following the PIK issuance.
Enra Specialist Finance
Issue
We engaged with the Enra team to enhance their social strategy, as part of our targets regarding the United Nation's sustainable development goals.
Response
Enra acknowledged the importance of developing their ESG policy following our engagements on TwentyFour's sustainable investment definition.
We held an educational discussion with Enra, surrounding market best practice in aligning to SDG's and scope three emission reporting.
In response, Enra have formulated a number of targets that align to UN SDG 10 (Reduced inequalities), including a KPI measuring development in mortgages to first time buyers. There is a clear timeline for implementation in the near-term, and this aligns to our definition of a sustainable issuer at TwentyFour.
Action
This was considered a strong engagement. We were impressed with the agility of Enra's response to our feedback and are now comfortable with the classification of a sustainable lender. We will continue to engage with the team as the policy landscape evolves on the topic.
CLO manager exposure
Issue
Earlier in the quarter, the European Banking Authority released answers to a previous Q&A regarding the methods of compliance with European risk retention requirements under the current regulatory framework. This deemed that CSAs (conditional sale agreements) are considered out of scope with compliance.
Response
Where we had flagged that a manager had used the CSA method for compliance, we reached out to the team to understand their timeline and approach for compliance. The common remedy for this, was to 're-season' assets in the portfolio using an FPA (forward purchase agreement) or, by qualifying as an originator.
The market response to this announcement has been encouragingly swift. Participants have been coordinated, and there has been little disruption in new issuance as a result.
Action
We expect mangers to action an amendment to risk retention language in documentation. Where we have relevant exposure, we have created a record of manager response and will continue to engage as the remedial timeline progresses.
Useful links
Sustainability
