"As fixed income investors we have the benefit of regular contact with company management, so our engagement can absolutely have an influence on policy. If as capital allocators we can nudge bond issuers towards more sustainable business models, then we'll do so."
TwentyFour is a prominent investor in European asset-backed securities (ABS) markets. From our experience the specialist structures and complexity associated with this asset class makes ESG data gathering more challenging compared to more mainstream bond markets, but we have worked hard with issuers on closing this data gap and have also extended our Observatory model to cover ABS-specific metrics. We believe this proprietary ESG work is unique in the European ABS space, and it is well regarded among our clients and other market participants.
As an active manager, we don’t rely solely on external ESG data providers or a standalone ESG team within our business to provide our portfolio managers with an ESG score. For true ESG integration we believe portfolio managers must be accountable for judging how ESG factors will impact the value of their investments over time.
We see this more active approach to ESG scoring as particularly important in fixed income, where commercial ESG data coverage is not as comprehensive as it is in the equity markets.
The TwentyFour ESG Score is therefore a unique measure that combines inputs from our ESG data partner with our own analysis.
Learn more about the TwentyFour ESG Score
The TwentyFour ESG scoring system is designed to specifically suit our active management style because it enables us to place a greater emphasis on more nuanced ESG factors such as Engagement, Momentum and Controversies.
Engagement
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 influence corporate policy by engaging with management on an ongoing basis. We publish a quarterly summary of all our engagements with bond issuers here (under Principle 9), along with details of any resulting investment decisions.
"ESG isn’t a huge departure from our regular investment process – we look at ESG risks in the same way we do any other risk to our clients’ investments. However, it is important to recognise these are some of the biggest risks facing our world today, and we think they will have a big impact on long term returns."
Arms Exclusion Policy
Carbon Emissions Engagement Policy
Environment and Social Sustainable Policy
