IIGCC launches Bondholder Stewardship Working Group to promote bondholder influence to support climate action and steer the transition to net zero

• Chaired by Chandra Gopinathan, Railpen, the working group represents asset owners and asset managers and aims to improve governance for bondholders, while providing practical guidance and a collaborative, structured and best practices-led approach to bondholder stewardship.
• The working group has two workstreams: Bondholder Engagement (workstream one) and Financing Structures and Frameworks for New Issuances (workstream two).
• IIGCC publishes Position Statement outlining scope and objectives of the working group.

The Institutional Investors Group on Climate Change (IIGCC) today announces the launch of a Bondholder Stewardship Working Group. The working group – comprising 9 core member investors representing £2.66 trillion AUM and a mixture of asset owners and asset managers – aims to support investors to use their influence as bondholders to meet their clients’ and their own climate objectives by working with companies to address the risks and opportunities associated with climate change and facilitate the transition to net zero.¹

Investor approaches to climate action and net zero, including those with commitments under the Net Zero Asset Managers initiative, are underpinned by stewardship and corporate engagement. But despite the potential of bondholders to influence companies, owing to their importance in funding company capital structures and the size of the debt market, bondholder stewardship and engagement practices are less established relative to equities. Specifically, there is an overall absence of bondholder-specific guidance, governance structures, accountability mechanisms and escalation measures.

To seize the opportunity of driving real-world emissions reductions through bondholder stewardship and to address the needs of investors, the working group will provide guidance on best practices for climate-related disclosure, stewardship and engagement and new financing structures for corporate bonds. The scope and objectives of the working group are outlined in a Position Statement.

Complementary workstreams

The working group launches with two complementary workstreams. The first – Bondholder Engagement – will focus on developing engagement guidance specifically for bond investors and will supplement the IIGCC Net Zero Stewardship Toolkit. Using the guidance, the intention is to pilot bondholder engagement via initiatives such as Climate Action 100+.

The second workstream – Financing Structures and Frameworks for New Issuances – will focus on developing and advocating best practice standards to help scale green financing, and enhancing the debt financing ecosystem by identifying areas for improvement and collaboration between corporate issuers, banks and regulators.

Stephanie Pfeifer, CEO, IIGCC, said: “To date, the significant potential for bondholders to drive the transition to net zero through stewardship has been largely untapped. The Bondholder Stewardship Working Group will therefore play a valuable role in promoting the industry innovation and development of practical tools required to ensure bond investors not only meet their net zero commitments, but ultimately accelerate real-world emissions reductions.”

Chandra Gopinathan, Railpen, and Chair of the Bondholder Stewardship Working Group, said: “Climate as a financial risk is material to all capital providers of a company. Despite an outstanding amount almost three times that of equities, the current governance and accountability mechanisms for bondholders to influence the climate transition, remain weak. The Working Group aims to empower bondholder stewardship by providing a best-practices led approach with practical guidance across the financing lifecycle.”

ENDS

Notes to editors

¹ Core working group members

Allianz Global Investors

Eurizon Capital

Insight Investment

Jupiter Asset Management

Ninety One

Neuberger Berman

Phoenix Group

Railpen

Royal London Asset Management

Other investors will also support the core working group and be consulted as its work progresses.

Media contact

Ross Gillam

Head of Media Relations, IIGCC

rgillam@iigcc.org

+44 (0)738 850 6013

About IIGCC

The Institutional Investors Group on Climate Change (IIGCC) is the European membership body for investor collaboration on climate change and the voice of investors taking action for a prosperous, low carbon future. IIGCC has more than 390 members, mainly pension funds and asset managers, across 24 countries, with over €60 trillion in assets under management.

IIGCC works to support and help define the public policies, investment practices and corporate behaviours that address the long-term risks and opportunities associated with climate change. For more information visit www.iigcc.org and @iigccnews