CNS-Responsible-Investing 2024 - Flipbook - Page 21
Illustrative Example: National Bank
Assess
Score
Integrate
Engage
Analysts identified material
governance risks tied to anti-money
laundering (AML) compliance
failures, weak internal controls, and
lack of executive accountability.
Assigned a lower governance score
with increased weight on board
oversight, CEO accountability, and
compensation practices.
Reflected governance risk in issuer
reports and adjusted risk premiums.
Maintained a neutral position with
valuation as the key driver.
Engaged directly with management
to discuss leadership structure,
alignment of compensation
practices, and enhance disclosure.
Our engagement e昀昀orts aim to maintain ongoing
dialogue with company boards and management teams,
track engagement outcomes, and contribute to industry
discussions through our participation in initiatives such
as UNPRI.
“As credit investors, it is imperative
that we incorporate all fundamental
considerations into our assessment of a
Evolution and Progress
company’s credit pro昀椀le—including ESG
Over the years, we have continued to re昀椀ne our
ESG integration process in preferred securities by
adapting to emerging regulatory guidance and
market developments. This past year, for example,
the European Banking Authority (EBA) published
an updated set of guidelines on how banks should
integrate ESG risk management into their operations
and business models, adding more risk indicators to
consider in our ESG scores.
factors, which can materially in昀氀uence
Looking ahead, we are preparing to evolve our ESG
framework further. In 2025, we will begin the process
of transitioning to an enhanced ESG Scorecard. This
next phase re昀氀ects improvements in methodology, data
resources, and internal capabilities, and will be designed
to provide deeper, more nuanced assessments of ESG
risks and opportunities across 昀椀nancial institutions.
This evolution reinforces our commitment to
maintaining a thoughtful, forward-looking approach
to ESG integration in a sector undergoing meaningful
regulatory and market transformation.
creditworthiness by either mitigating
risk or enhancing long-term value.”
RAQUEL McLEAN, CFA
VP, PORTFOLIO MANAGER
COHEN & STEERS | RESPONSIBLE INVESTING 21
