The asset owner reviews responses to the RFP to select managers that best fit the investment mandate. Specific weight should be assigned to investment beliefs and ESG skills in investment manager appointment decisions. Attention should be paid to aligning timeframes through fees and pay structures, ensuring that ESG issues are fully integrated into investment decision-making and monitoring. It also helps to ensure that the investment manager engages with companies and issuers and votes shareholdings where applicable.
What is the role of investment consultants?
Investment consultants will often review RFP responses and carry out further conversations with managers to narrow down the universe to a shortlist based on the defined investment mandate. They may also organise and host ‘beauty parades’ of shortlisted managers presenting to the asset owner, ensuring that the managers are briefed to respond to key concerns arising from their RFP responses or from the client’s beliefs.
Questions to ask the investment consultant
- How would the investment consultant advise asset owners to differentiate between asset managers in a shortlist based on how ESG issues are incorporated into the investment process?
- What key questions should the asset owners ask prospective managers at any selection pitch or presentation?
- Can the investment consultant provide examples where clients adopted ESG considerations into shortlists due to the consultant’s advice? What were the (dis)advantages or drivers involved?
- If a specific client ignored the investment consultant’s advice in relation to ESG incorporation, what was the key reason for this decision?
Investment consultants and ESG: An asset owner guide
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Step 4 - Screening and shortlist