IIGCC and PRI unveil stewardship working groups

Focusing on bondholders, and firms' engagement resources, respectively

Firms’ stewardship practices are in the spotlight this week, with projects launching for institutional and bond investors.

The first comes from the Institutional Investors Group on Climate Change (IIGCC), which has launched a bondholder stewardship working group and plans to release engagement guidance for bondholders.

Bondholders typically fund 50-80% of a company’s capital structure. With $253trn in outstanding global long-term debt as of 2021 compared with $94trn in listed equities, bondholders are crucial to providing transition capital, the IIGCC said.

Chaired by Chandra Gopinathan, senior investment manager, sustainable ownership at Railpen, the IIGCC Bondholder Stewardship Working Group wants to see more collaboration when it comes to bond investors’ stewardship efforts.

The group has two workstreams: bondholder engagement, which looks at stewardship practices and looks to pilot new engagement approaches; and financing structures and frameworks for new issuances, which looks to scale green financing by developing standards to labelled bonds and enhance the debt financing ecosystem.

The resultant guidance will complement the IIGCC’s Net Zero Stewardship Toolkit and be shared with regulators and policymakers.

Stewardship resources

The second stewardship project announced this week comes from the Thinking Ahead Institute, which has been chosen by the Principles for Responsible Investment (PRI) to assess stewardship resources more widely within institutional firms.

The project, which also involves a working group, the stewardship resourcing working group, will include interested industry participants from across the size and asset-class spectrum and is expected be completed in July 2023.

It will involve a benchmarking study to better understand current stewardship practices, resourcing requirements and other key costs and then propose a calculation for working out how much resources firms might need.

Marisa Hall, co-head of the Thinking Ahead Institute, said: “This is an important project aimed at encouraging positive behavioural change and increasing stewardship resources commensurate with rising systemic risks.”

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Natasha Turner

Natasha is global deputy editor at ESG Clarity, part of the Bonhill Group, and has been a financial journalist for six years. She has been shortlisted for Story of the Year and Investment Journalist of...