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Asset owners, sitting atop the investment chain with long-term investment horizons, are ideally placed to drive responsible investment throughout the investment cycle.
This chapter focuses on an investment manager’s culture, investment approach and objectives, investment policy, time horizon, asset classes and governance.
This chapter focuses on ESG in investment decision making and portfolio construction, as well as on the risk and return framework.
This chapter looks at how asset owners can be effective stewards of their assets and, if such functions are outsourced, determine how an investment manager deals with stewardship and active ownership issues.
The selection process should consider the ongoing reporting from the manager to the asset owner and satisfy the latter’s internal investment-related information requirements, as well as be able to accomodate their own reporting to stakeholders.
This final chapter offers practical ideas for bringing ESG matters raised during the manager selection process together in order to facilitate ultimate decision making.
Selecting an investment manager that can act in accordance with an asset owner’s investment preferences requires thorough due diligence of the manager’s investment approach and performance, investment process, stock selection and portfolio construction decisions.
Once the most eligible asset manager is selected, asset owners can include ESG terms in the investment management agreement (IMA) to formalise their expectations.
To review investment performance and managers’ integration practices, asset owners: organise periodic monitoring meetings with investment managers; ask them to complete questionnaires/regularly report; and/or use methods such as peer analysis, internal scoring systems and portfolio analytic tools.
How to identify options for incorporating responsible investment considerations into fund terms when committing to a private equity fund.
An exchange of information, underpinned by dialogue, will keep LPs informed about the ESG characteristics of their private equity investments and the responsible investment practices of their investment managers.