Fixed income case study
ESG in action



Key Points

Attended Wabtec’s most recent investor day and learned about how the company’s ongoing developments are part of a move to decarbonize the rail industry globally.
Found conviction in Allied Properties’ commitment to preserving heritage and culture in the communities it operates.
Analyzed Stericycle’s larger transformational changes to the company’s governance structure and how it influenced the board in terms of independence and diversity.


Westinghouse Air Brake Technologies Corp. (Wabtec) is one of the world’s largest providers of equipment and components to the global freight and transit rail industries.
The company holds a leading market share in many products that are core to the operations of rail networks globally. While attending Wabtec’s most recent investor day, we learned some interesting developments that will lead to the decarbonization of the rail industry globally.
Wabtec’s core business is to facilitate the movement of goods and people by rail, which helps reduce greenhouse gas (GHG) emissions. According to the American Association of Railroads (AAR), moving freight by rail instead of by truck can reduce GHG emissions by up to 75%. Trains are three to four times more fuel efficient than trucks, and one train can carry the equivalent freight of hundreds of trucks. As a result, despite accounting for 40% of U.S. freight, trains only produce 1.9% of U.S. GHG emissions. Wabtec is well-positioned to be an ESG leader in a space that is already an environmentally friendly mode of transportation.
According to the American Association of Railroads (AAR), moving freight by rail instead of by truck can reduce GHG emissions by up to 75%. Trains are three to four times more fuel efficient than trucks, and one train can carry the equivalent freight of hundreds of trucks."
One of Wabtec’s core products is the locomotive, which is essentially the engine of a train. Currently, most locomotives are fueled by diesel gasoline. Despite being more environmentally friendly than trucking, burning diesel still emits harmful GHGs into the atmosphere. Wabtec is working towards reducing industry emissions through innovation. In 2021, Wabtec delivered the world’s first heavy-haul 100% battery-electric locomotive. This is just one of many examples of innovative technologies that Wabtec is working on to help lead the industry to a zero-emission rail network in the future.


Allied Properties is a leading owner, manager, and developer of Class I office properties in Canada, a distinct class of real estate created by re-using light industrial buildings located in urban markets.
These properties have distinctive physical attributes, such as high ceilings, natural light, and exposed brick, and are located near central business districts, which makes them attractive to a diverse mix of tenants.
A core holding in our fixed income portfolios for many years now, we have spent a lot of time touring buildings and meeting with the company’s management. This has led us to appreciate how Allied is shaping the communities its buildings are in. Since most of Allied’s properties are former heritage buildings from the early 1900s that have been adapted to modern use cases, these structures must be managed in a way that commemorates history while also respecting the neighborhoods they reside in.
An example of Allied’s commitment to these communities is the company’s Make Room for the Arts program, which has been running since 2012. The goal of this program is to support the economic viability of local artists and increase the cultural and artistic vibrancy of the neighbourhoods where the company operates. Allied provides discounted temporary and permanent spaces for artists, hires artists to integrate art and culture into its buildings, and partners with institutions that support artists and artist communities.
Allied’s commitment to preserving heritage and culture in the communities it operates has led to ownership in some of the most interesting office spaces in the city, which has helped attract high-quality, knowledge-based tenants like Google and Shopify.


A provider of regulated medical waste management and document destruction services, Stericycle Inc. serves more than one million clients worldwide, including hospitals, dental offices, pharmacies, and municipalities.
Back in 2019, Stericycle’s governance structure underwent some large transformational changes. The business had recently gone through a tumultuous period resulting from aggressive pricing practices with some of its customers. As part of the turnaround, a new management team was brought in, led by CEO Cindy Miller, a former executive at UPS. We were immediately impressed with Cindy after meeting with her for the first time in 2019. She was firm in her view that to turn the business around, Stericycle needed to overhaul its balance sheet, internal enterprise resource planning (ERP) systems, and its governance structure.
Since 2017, Stericycle has added nine new directors to its board. The average tenure for a director is now less than four years after several long-tenured directors stepped down. There are now tenure limits on directors to ensure continued independence and fresh thinking. Eleven of 12 board members are independent, and the chair of the board as well as committee chairs are independent. Diversity is also a core component of the governance structure, with 30% of board members being female and 50% of directors being considered diverse by gender, race, or ethnicity.
Overall, we are very pleased with the changes that have been made to Stericycle’s governance structure in recent years. The current governance practices we see reinforce our belief in the high-quality characteristics of Stericycle’s business.
Sources: AAR Sustainability Fact Sheet, Wabtec Sustainability Report, Allied ESG Report, Burgundy research, company filings

About the Authors

James Arnold
James Arnold, CFA
Vice President,
Portfolio Manager
In investing, you can never hide from your results. James learned this lesson early on when he was participating in stock market competitions during university. James’ appreciation for a long-term, value-based approach to investing was cemented during these competitions as short-term performance was often uncorrelated to the quality or depth of research. For James, one of the most fascinating aspects of fixed income investing is examining the unique risks and characteristics of debt securities alongside company and industry analysis. While company fundamentals, and not macro-events, are the foundation of Burgundy’s investment theses, the close link between macroeconomic conditions and bond prices adds a welcome layer of analysis to the fixed income investing process.
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Vince Hunt
Vincent Hunt, CFA
Vice President,
Portfolio Manager
Vince began his investment career during the 1997-1998 Asian crisis and was immediately intrigued by the interaction of fear, greed and central bank actions on market prices. His interest in credit and interest rate cycles has continued ever since. Vince believes opportunities present themselves only periodically and an astute investor must be ready to act decisively to produce exceptional long-term results. As a fixed income Portfolio Manager at Burgundy, he patiently waits for opportunities where he can apply Burgundy’s investment philosophy.
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