ESG Intelligence: Corporate Bond Stewardship

Engagement activities, also known as stewardship or active ownership are purpose-driven meetings between listed companies and their major shareholders. Engagement between issuers and investors are an established and important exercise to share views and highlight general concerns ahead of the preparation of the Annual General Meeting (AGM). Such extra-financial engagements have usually been focused on corporate governance topics in the past, but the addition of environmental and social topics to the list of discussion points has already become an established practice. Compared with equity investments, engagements by and with bondholders are a relatively new trend, and only recently this practice has gained a certain degree of acceptance and growth. This is because stewardship originates from the idea that equity investors are shareholders and therefore beneficial residual owners of companies, as such, their interests should extend beyond bondholders who are primarily concerned about debt repayment and coupons. However, the stewardship landscape is rapidly shifting, starting from the 2020 UK Stewardship Code that highlights the need for stewardship to cover all asset-classes and be outcomes-driven.

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Posted 28 April 2021 by Sandro Barbato, Senior Associate - ESG, M&A and Corporate Governance Advisory, S&P Global Market Intelligence

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