New Guidance to Improve Fixed Income Stewardship

The Investment Association (IA) has published new guidance for its members – who collectively manage £9.4 trillion for savers and institutions – on stewarding fixed income assets, noting that best practice within equities is already well-established. Andrew Ninian, the IA’s Director of Stewardship and Corporate Governance, said: “With 30% of AUM invested in bonds, this guidance will help improve stewardship by calling on companies to present a coherent debt strategy and better explain how they are managing ESG risks and opportunities, as well as encouraging both companies and investors to build closer long-term relationships.” It follows a 2020 report published by HM Treasury’s Asset Management Taskforce, which recommended that the IA produce guidance on how existing fixed income stewardship efforts could be improved. The association’s recommendations for members include: bondholders increasing their focus on engagement for influence as opposed to information, ensuring that engagements contribute to long-term value for clients and cover long-term issues, and more effectively integrating stewardship across debt and equity holdings. The IA also outlined investors’ expectations for issuers of corporate debt, such as articulating a coherent debt strategy with respect to managing material ESG risks and opportunities, as well as improving disclosures to better reflect ESG metrics ad other information required for investors looking to fulfil their stewardship obligations. Richard Butters, Head of ESG Integration in Credit, at Aviva Investors, said: “Bond issuers and investors face the same uncertain world and the need for collaboration, transparency and consistency has never been greater. We welcome this new guidance as an important step towards these goals that may, over time, unlock the potential of fixed income markets to help address short term challenges and longer-term existential threats like climate change.” 

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