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COVID-19

Our Response

 

Updated as of September 21, 2020 

We continue to aim to strike an appropriate balance between our commitment to the health and safety of all our employees, and our obligation as a firm and individuals to continue providing essential services to our clients. To that end, and in line with Federal, Provincial, and Municipal recommendations for businesses, we have implemented a Return To Work Plan that, with appropriate and reasonable safeguards to protect them, will see employees work on site and from home on a rotational basis. We have enacted standard health and safety measures such as: avoiding non-essential travel outside of Canada, maintaining physical distancing between workstations, frequent hand washing, and wearing  a  mask whenever physical distancing is not possible. In addition to these standard health and safety measures, we have enhanced the air filtrations system in our offices by adding air purifiers and high grade filters to our HVAC system to boost the air quality throughout the building. RPIA will endeavour to update these efforts as the pandemic evolves and new expert advice becomes available.

Market Conditions & Opportunities Ahead

COVID-19 has and will continue to reshape the global economic landscape. Six months on from the liquidity crisis of March 2020, investors are faced with a difficult challenge. Equity markets have rebounded strongly and valuations sit at elevated levels by historical standards. In contrast, fixed income securities provide a very low yield, with little margin of safety if interest rates rise. A 60/40 blend of equities and bonds may not deliver the return individuals and institutions are looking for.

We believe investors should be looking to credit strategies as a way of addressing this challenge. Credit is often referred to as “equity light” – a way of generating a reasonable return without the downside risk of equity investments. The performance of credit investments has been strong since March 2020. Looking forward, we continue to be excited by the opportunity to invest in corporate bonds at attractive levels. Uncertainty in the market generally leads to volatility, which we believe represents an opportunity for actively managed credit strategies.

Please contact a member of the Client Portfolio Management team if you would like to discuss our market views or strategies in more detail.

Market Insights

A Closer Look: Women in the Workplace

October, 2021

Three members of our ESG Committee, Ozioma Nwankwo, Aaron Young, and Lubna Reda, participated in a Q&A to discuss the "S" in ESG, specifically when it comes to women in the workplace.

Lubna Reda: ESG (Environmental, Social, and Governance) factors have become more mainstream in recent years, and was especially accelerated by the impact of COVID-19. We’ve seen record high green bond and sustainability-linked bond issuances by companies all over the world and the rise of social bonds. We’ve spoken about our carbon-related initiatives before in our 2020 Sustainability Report and other articles, but today, we want to talk more about the S in ESG. Ozioma Nwankwo and Aaron Young from our ESG Committee have done extensive research on social topics, particularly about Women in the Workplace. I had the opportunity to ask them questions about what this issue means for responsible investing, our investment process, and our firm.

LR: Tell me about the importance of gender diversity in the workplace at a high level and how increasing diversity affects corporations.

Ozioma Nwankwo: Gender inequality is one of the most pressing issues faced by society. In light of the social progress made over the last few decades, we see more and more data pointing to the need to address this issue globally. The United Nations has listed the achievement of gender equality as one of their Sustainable Development Goals. At a more specific corporate level, it is becoming more apparent how gender diversity within a corporation truly does bolster performance. In May 2020, McKinsey & Company published an incredibly insightful article: “Diversity Wins: How inclusion matters.” This was the third report in a series investigating the business case for workplace diversity. They found that now more than ever, there is a strong correlation between a company’s level of diversity and its likelihood of financially outperforming its industry peers. According to this report, “companies in the top quartile for gender diversity on executive teams were 25% more likely to have above-average profitability than companies in the fourth quartile—up from 21% in 2017 and 15% in 2014.” These reports and others highlight how a corporation’s willingness and ability to increase diversity and inclusion indicate how its overall business affairs are managed and how it can have a meaningful impact on profitability.

LR: As corporate investors, how can RPIA address this issue?

Aaron Young: As corporate investors, we recognize that there is a strong business case for workplace diversity. As a firm, we understand that promoting a more diverse, equitable, and inclusive workplace will make us a better organization. Ultimately, we also believe we should apply this thinking to the companies in which we invest. With this issue in mind, we aligned ourselves with the UN SDG 5 (Gender Equality), and our goal is to formulate a model that assesses how well companies are addressing this issue through both an internal scoring system and engagement with issuers. Our scoring system aims to quantify the material aspects of gender diversity in the workplace and goes beyond just considering board and workforce composition. By isolating material disclosures, we selected four key pillars as our focus: Labor Force Participation, Upwards Mobility, Leadership, and Equal Pay.

LR: Why these pillars? What do they tell us?

ON: We selected these pillars because we believed they were quantifiable, impactful, and would facilitate meaningful engagement with our issuers.

First, Labor Force Participation. This pillar is invaluable and straightforward because the natural first step to understanding and closing the inequality gap between men and women in the workplace is knowing the current rate of workforce engagement women receive. Scoring a company here will tell us how much of a participation gap exists within their workforce.

The second pillar is Upwards Mobility. This metric depicts the change in the percentage of women in roles at the different levels of the corporate structure. A company’s score here will indicate the rate at which women are being promoted within the workplace, which demonstrates whether women are given the same opportunities for career advancement as their male peers.

Third, we have Women in Leadership. Our initial research on this pillar focused on board composition (i.e., the number of women vs. men holding board seats). Because  we have seen a great deal of social change, these senior roles, which have arguably more visibility, are increasingly occupied by women. Though this is noteworthy progress, it is unfortunately not realized across all levels of the corporate structure. This pillar takes into account the percentage of women at each level of the corporate structure. The data shows that women are still over-represented in entry level roles, and as we move up the corporate structure, the number of women holding positions of authority and influence dwindles.

Finally, Equal Pay – this pillar highlights the ever-present need to bridge the gender pay gap. Scoring a company here will show how significant the pay gap is between men and women in their workforce and whether they have committed to a plan of action to bridge this gap.

LR: Let’s talk about the pandemic – how did the COVID-19 pandemic exacerbate the issues women face in the workplace?

ON: As you can imagine, COVID-19 had a very notable impact on the representation of women in the workplace. This is because the crisis was twofold: a health crisis and an economic one. The pandemic caused a disproportionate increase in job vulnerability for women. There are two key things to consider in this context: 1) the closure of childcare centers and schools and 2) a declining need for low-skilled entry-level jobs in the corporate sector. The pandemic intensified gender diversity issues in the workplace by causing many women to assume childcare responsibility in their households, often leaving them with no choice but to leave their jobs, thus undoing some progress made in the area of increased labor force participation. Another point worth mentioning is that the pandemic put a severe strain on the healthcare sector, adding another layer of vulnerability to women in the workplace because women were also over-represented in front-line roles.

LR: How is RPIA looking to modify its internal practices to promote diversity and inclusion?

ON: From an investment process perspective, we certainly hope to expand our social scoring system to further measures of marginalization. Not only are we looking to move beyond the binary view of gender that we are currently employing, but we also hope to develop similar scoring systems with the goal of promoting equity and inclusion along the lines of ethnicity and race as well as ability and accessibility. From the perspective of our firm’s culture, we remain committed to promoting diversity and inclusion. In our hiring, we strive for increasingly diverse candidate pools by encouraging new applicants from marginalized groups. In 2020, we were proud to launch our Allyship Committee, which has been instrumental in providing a safe place for our staff to have ongoing honest conversations and learn from one another about how best to be allies.

LR: And, why should investors care?

AY: ESG metrics cover a broad spectrum of company information often excluded or not explicitly recognized from “traditional” financial analysis. The research has found that companies that pay special attention to environmental, social, and governance concerns tend to exhibit better risk management and understanding of future headwinds facing their industry. By combining our ESG framework with in-depth credit analysis, we believe we can gain a better picture of a company’s risk-reward profile, which ultimately benefits investors seeking high-quality holdings in their investments.

LR: Thank you both for taking the time to answer my questions! This has been a great learning opportunity for me and I hope it will be for others as well.

For more information on our approach to ESG, visit: www.rpia.ca/esg.

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