Organizational Policy and Infrastructure
Identify ESG core values and priorities at your organization
“ESG” can mean different things at different organizations. By identifying core values, setting priorities, and defining what ESG means to your organization, you can begin developing a more effective ESG program.
- Go to ESG at Nordea: Environmental Social GovernanceESG at Nordea: Environmental Social GovernanceNordea outlines what ESG means for their organization on the Sustainability section of their website.
- Go to Sampension's 2018 ESG ReportSampension's 2018 ESG ReportSampension defines (2018) seven focus areas for their ESG program on pages 4-5 of their 2018 ESG Report.
- Go to The First, Second, Third, and Fourth AP Funds' common core values for managing fundsThe First, Second, Third, and Fourth AP Funds' common core values for managing fundsThe first, second, third, and fourth AP Funds' statement on core values, reporting, and investment screening policies.
- Go to APG's Investing With an Eye for Environment, Society, and Good GovernanceAPG's Investing With an Eye for Environment, Society, and Good GovernanceAPG Asset Management outlines their organization’s definition for ESG within the Responsible Investing section of their web site.
- Go to Cambridge Associates' Considerations for ESG Policy DevelopmentCambridge Associates' Considerations for ESG Policy DevelopmentCambridge Associates’ white paper contains descriptions of key elements of purpose, priorities, and principles to consider.
Draft and publish an ESG policy
A well-crafted ESG policy guides and articulates how LPs take ESG considerations into account as part of their organization’s investment (and risk mitigation) strategy. Encouraging transparency around these policies helps educate stakeholders about an organization’s ESG practices.
Some LPs have also decided to identify and exclude certain industry sectors which are incongruent with their mission or values as a component of their ESG policy via exclusion lists.
ESG Policy Resources for Consideration
- Go to APG's Responsible Investment & Stewardship PolicyAPG's Responsible Investment & Stewardship PolicyAPG Asset Management provides a link to their Responsible Investment & Stewardship Policy on their web site.
- Go to CalPERS' Private Equity: Sustainable Investment GuidelinesCalPERS' Private Equity: Sustainable Investment GuidelinesCalifornia Public Employees’ Retirement System (CalPERS) has published their Private Equity Sustainable Investment Practice Guidelines on their web site.
- Go to University of Toronto Asset Management Corporation's Responsible Investing PolicyUniversity of Toronto Asset Management Corporation's Responsible Investing PolicyUniversity of Toronto Asset Management Corporation has published their Responsible Investing Policy.
- Go to BSR's ESG in Private Equity: How To Write a Responsible Investment PolicyBSR's ESG in Private Equity: How To Write a Responsible Investment PolicyBusiness for Social Responsibility (BSR) released a report titled “ESG in Private Equity: How to Write a Responsible Investment Policy."
- Go to PRI's Investment Policy: Process and PracticePRI's Investment Policy: Process and PracticeThe United Nations-supported Principles for Responsible Investment’s (PRI) Investment Policy: Process and Practice document helps asset owners to revise and develop their investment policy and incorporate long-term factors into their investment decisions.
Exclusion List Resources for Consideration
- Go to The IFC's Exclusion ListThe IFC's Exclusion ListThe International Finance Corporation (IFC) published a list in 2007 of types of projects it will not invest in.
- Go to Schroders' Demystifying Negative Screens: The Full Implications of ESG Exclusions ReportSchroders' Demystifying Negative Screens: The Full Implications of ESG Exclusions ReportSchroders published a paper detailing the practical challenges and data associated with negative screens that govern investment policies.
- Go to PRI’s Introduction to Responsible Investment ScreeningPRI’s Introduction to Responsible Investment ScreeningPRI’s guide highlights several reasons investors use screening (including exclusion lists) and outlines some key steps to follow and explains some implications to consider when using screening.
Appoint or hire an ESG specialist
Tasking one or more individuals with oversight of the investment program’s ESG efforts elevates ESG as a priority in the organization and ensures a consistent and coordinated approach. Some LPs have the resources to hire a dedicated ESG specialist, while others have found success delegating this responsibility to an existing member of the team.
ILPA is currently looking for sample job descriptions used by LPs to recruit ESG specialists into their PE programs. Please e-mail Matt Schey (mschey@ilpa.org) if you have a sample job description you would be willing to share.
Form an ESG committee or working group
A strong ESG committee consists of executive sponsorship, investment decision makers, and middle and back office stakeholders. Often chaired or led by a designated ESG specialist, a committee approach to decision making ensures a coordinated ESG integration effort and helps generate broad-based support.
- Go to CPPIB's 2019 Report on Sustainable InvestingCPPIB's 2019 Report on Sustainable InvestingCanadian Pension Plan Investment Board (CPPIB) describes both their Sustainable Investing Group and Sustainable Investing Committee on page 12 of their 2019 Report on Sustainable Investing.
- Go to University of Toronto Asset Management Company's Internal CommitteesUniversity of Toronto Asset Management Company's Internal CommitteesUniversity of Toronto Asset Management Company shares the mandate and responsibilities of its Responsible Investment Committee under the "About Us" -> "Internal Committees" section of its website.
Consider alignment with the Principles for Responsible Investment (PRI) and/or joining other organizations with like mandates
The Principles for Responsible Investment (PRI) represents a robust set of ESG reporting standards available to LPs (and others) to publicly signal a commitment to ESG. In addition to serving as a tremendous resource for ESG-related investment information, becoming a signatory makes a strong public statement of an organization’s commitment to ESG-friendly principles. Other prominent organizations include, but are not limited to, Ceres, Sustainability Accounting Standards Board (SASB), and Intentional Endowments Network (IEN).
- Go to About the PRIAbout the PRIThe United Nations-supported Principles for Responsible Investment’s (PRI) offers background information on its commitment to promoting responsible investment globally.
- Go to PRI's Principles for Responsible Investment ArticlePRI's Principles for Responsible Investment ArticlePRI provides an overview of the six principles for responsible investment.
- Go to PRI's Become a Signatory ArticlePRI's Become a Signatory ArticlePRI details the process to becoming a signatory of the PRI.
- Go to Ceres HomepageCeres HomepageCeres is a sustainability nonprofit organization working with the most influential investors and companies to build leadership and drive solutions throughout the economy.
- Go to SASB HomepageSASB HomepageThe Sustainability Accounting Standards Board (SASB's) mission is to help businesses around the world identify, manage and report on the sustainability topics that matter.
- Go to Intentional Endowments HomepageIntentional Endowments HomepageThe Intentional Endowments Network (IEN) is the leading network for endowment fiduciaries, senior administrators, CIO’s, and other decision-makers to learn from peers and experts about investing for a thriving, sustainable economy.
