PRI launches private equity due diligence questionnaire

private equity due diligence questionnaire

November 30, 2015

The PRI has launched the Limited Partners’ Responsible Investment Due Diligence Questionnaire (LP Responsible Investment DDQ) to encourage standardised due diligence on environmental, social and governance (ESG) considerations in private equity. The LP Responsible Investment DDQ is an adaptable list of questions that limited partners (LPs) can ask general partners (GPs) pre-commitment, to understand and evaluate how GPs integrate material ESG factors into their investment practices.

The LP Responsible Investment DDQ is accompanied by a guidance document to enhance and support the LP-GP dialogue. It includes more developed questioning, short case studies that demonstrate the market relevance of the due diligence questions, and pointers to publicly available resources that will help develop both understanding and application of the responsible investment practices referred to in the LP Responsible Investment DDQ.

The project was convened by the PRI in response to a marked increase in the number of LP requests for ESG disclosure from GPs and a growing demand from GP PRI signatories for industry consistency in these requests.

The LP Responsible Investment DDQ was developed in consultation with a signatory working group (composed of 41 LPs, funds of funds and GPs) to build upon Section 1 of the ESG Disclosure Framework for Private Equity (Disclosure Framework). Where the Disclosure Framework provides high-level guidance and explains the rationale behind asking ESG-related questions, the LP Responsible Investment DDQ provides a detailed list of such questions (21 in total) that LPs can ask.

The PRI has partnered with industry associations AFIC, AVCAL, BVCA, EMPEA, ILPA and Invest Europe on this project and looks forward to working with them to encourage and support LPs worldwide to adapt the LP Responsible Investment DDQ to their due diligence processes. The LP Responsible Investment DDQ is not intended to be used as a check-list, but as a tool to establish dialogue, and LPs may want to supplement the LP Responsible Investment DDQ with additional questions that meet their own requirements.

Please direct any queries to Natasha Buckley, manager of the PRI private equity programme.