All Technical guide articles – Page 2

  • Technical guide

    Consultant’s organisational approach


    The previous sections of this report have focused on the advice on ESG matters that investment consultants provide to their asset owner clients and the questions that asset owners should ask on the subject. This section focuses on the investment consultant’s own organisational approach to responsible investment. That is, ...

  • Technical guide

    Step 5 - Appointment


    Asset owners will want to formalise commitments from investment managers through contracts or side letters to existing contracts. In addition to standard commercial terms, specific provisions related to ESG objectives and reporting can be included to ensure adequate delivery of services.

  • Technical guide

    Step 4 - Screening and shortlist


    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 ...

  • Technical guide

    Step 3 - Requests for proposal


    The asset owner will develop the requests for proposal (RFP) document, aligned with the original mandate text. Clear descriptions of the required capabilities will help collect information to enable the asset owner to review and compare the suitability of managers.

  • Technical guide

    Step 2 - Research and long-lists


    Asset owners need to identify a pool of investment managers who meet the requirements described in the mandate. In doing so, the asset owner will review and rank the investment beliefs and capabilities of individual managers, including on aspects such as investment philosophy, investment process, risk management, governance, product range ...

  • Technical guide

    Step 1 - Mandate formation


    Asset owners should define the types of mandate that fit their requirements and ensure that those investment mandates align the investment managers’ approach with the asset owners’ investment principles and strategies. In forming mandates, the asset owner should emphasise the ESG capabilities required to successfully deliver on the mandate. ESG ...

  • Technical guide

    Step 4 - Investment policy and governance


    Asset owners need to ensure that they have the necessary resources, expertise and processes in place to implement the strategy. They will typically codify their investment strategy in relation to their investment decision-making process, asset allocation, ESG incorporation, active ownership, manager selection and monitoring criteria through an investment policy. Some ...

  • Technical guide

    Step 3 - Strategy formulation


    Asset owners need to decide how they are going to implement their investment principles in their asset allocation and risk management processes, and in their reporting.7 To do this, they need to define their ambitions (e.g. on financial return, risk appetite and ESG considerations) over an appropriate timeframe, and establish ...

  • Technical guide

    Step 2 – Investment principles and beliefs


    Asset owners need to define investment principles to set the direction for their investment policy, investment practice and organisational culture. These principles help define how the asset owner will create investment value in the context of future uncertainty, risk and opportunity. They also help asset owners make practical decisions about ...

  • AO ESG consultant_2500x1250px
    Technical guide

    Investment consultants and ESG: an asset owner guide


    Investment consultants advise on how trillions of dollars are invested worldwide, but most consultants are failing to consider the role that ESG issues play in investment performance.

  • Technical guide

    Investment strategy


    An asset owner’s overall investment process starts with crafting an investment strategy. Asset owners will aim to set out a clear and explicit investment strategy that comprehensively considers: A. the full range of short-term and long-term return factors (e.g. social, technological, economic, environmental and political/regulatory) affecting their portfolios; 5 B. ...

  • Technical guide

    Manager selection


    Manager selection is a core component of most asset owners’ investment process. Investment managers should either act in accordance with an asset owner’s investment preferences (if running a separate client account) or offer funds that can fit within the asset owner’s investment preferences, potentially in combination with others. Selections require ...

  • Technical guide

    Step 1 – Fiduciary obligations


    Asset owners and their fiduciaries need to understand and clarify the legal obligations towards their beneficiaries. These include fiduciary, ownership and other investor duties which, among other things, set out minimum standards for how ESG factors should be appropriately considered in setting an investment strategy. The asset owner should be ...

  • ESG integration in Asia Pacific
    Technical guide

    ESG integration in Asia Pacific: markets, practices and data


    Portfolio managers and analysts are increasingly incorporating environmental, social, and governance (ESG) factors in their investment analyses and processes.

  • forestry cover
    Technical guide

    Responsible investment in forestry


    Forestry investors are exposed to a range of environmental, social and governance (ESG) factors. How those factors impact investments – ultimately, whether they materialise as risks or opportunities for value creation – depends largely on an investor’s responsible investment approach. 

  • Local communities2
    Technical guide

    ESG factors in forestry investing


    Forestry investors must consider a range of ESG issues for both direct and indirect investments. Such issues may present material risks to forestry operations and the success of an investment if managed improperly. 

  • sun through trees
    Technical guide

    Next steps: the future of forestry investing


    The future of responsible forestry investing depends on how successfully the asset class can feature in the mainstream debates that are likely to shape the responsible investment universe in the coming years. Important questions to consider include:

  • Sustainable Development Goals (SDGs) poster
    Technical guide

    Achieving the SDGs through forestry investing


    In addition to climate impact, the strategies highlighted in the previous section also have an explicit focus on the broader tenets of sustainable development, and the involvement of local communities.

  • climate change grass and dry land
    Technical guide

    Forestry as a climate investment


    Beyond looking at ESG consideration from a risk and opportunity perspective, forestry investors and managers are increasingly seeking to generate positive impact in addition to market returns, particularly regarding issues such as climate change those related to the SDGs. 

  • Forestry investment process
    Technical guide

    Integrating ESG factors in the forestry investment process


    The consideration of ESG issues should be an integral part of the forestry investment process, taking into account the long-term nature of forestry investing and the different stages of a forestry investment’s lifecycle.