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CONTRIBUTORS

David Zahn, CFA, FRM

Head of European Fixed Income,
Franklin Templeton Fixed Income

Preview

In last year’s report, we highlighted our view that transparency is the foundation for sustainable finance, and we hope to build on that view this year by continuing to share engagement insights on some of the same topics, as well as new areas of regulation and market interest.

The level of engagement that we have received from our investee companies has been very positive, and our view around this is that there is growing recognition of the value of being an ‘engaged’ market participant, and the insights that these engagements have given us.

This year, we continued with our four-year-long focus on the energy transition—this time through the lens of the important ‘Science Based Targets’ tool—and we gained important insights into how these target setting tools are being viewed and used by the markets. The engagement was a cornerstone of our biodiversity strategy, and we had an opportunity to discuss financing ecosystems protection with both sovereign and corporate issuers. We also spent a fair amount of time trying to understand how our investee companies were responding or planning to respond to the EU Pay Transparency Directive that comes into effect in 2024. I invite you to explore those and other topics in the report.

In the 2023 calendar year, we made use of far more efficient engagement tools than ever before, allowing us to reach well over half thousands of our portfolio companies and sovereigns on a variety of topics.

In our latest engagement report, we look at the following themes:

  1. Energy transition
  2. Biodiversity
  3. Social cohesion
  4. Transparent reporting

Our engagements throughout 2023 were led by our aim to better understand the interests, ambitions and risks of all market participants, as well as the belief that transparent communication is key in the face of the growing complexity of this sector. It is through these engagements that we are committing to the development of a sustainable finance ecosystem that delivers strong results for everyone involved.

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