38 Notifications and Policy Disclosures In addition to robust financial reporting that is consistent with both ILPA guidance and industry best practice, GPs should provide to investors disclosures relating to policies and specific events that impact the fund, including material developments related to ESG factors, regulatory compliance or that present legal, reputational or business risk to the GP that may impact the fund. In general these disclosures should act as assurances that all investors are able to access relevant information surrounding potential conflicts of interest and any events that may impact the fund or any individual LP. ESG Policies and Reporting Among such disclosures, GPs should consider maintaining and periodically updating an ESG policy, provided to all LPs or to potential LPs on request. The policy should include information sufficient to enable an LP to assess the degree to which the GP’s investment strategy and operations are aligned with an individual LP institution’s ESG policies, including how ESG is factored into due diligence as well as incident disclosures and performance reporting. The policy should identify procedures and protocols that can be verified and/or documented, rather than a vague commitment of behavior. Responsible investment, or ESG investing, is an approach to investment that incorporates ESG factors into investment decisions, to better manage risk and generate sustainable, long-term returns. As a fiduciary and steward of capital, the LP expects that all potentially material risks and opportunities for the fund are identified and managed by the GP. GPs can demonstrate their commitment to ESG as an investment philosophy through a responsible investment policy,or by adhering to industry standards such as the Principles for Responsible Investment or the AIC Guidelines for Responsible Investment. Reporting frameworks have been established to help LPs understand, verify and assess GP processes for ESG integration, including: • ESG Disclosure Framework for Private Equity; • PRI Limited Partners’ Responsible Investment Due Diligence Questionnaire; • ILPA Portfolio Company Metrics Template voluntary ESG reporting section to support portfolio company-level reporting on ESG factors; • IFC Toolkit for Disclosure and Transparency; • PRI ESG Reporting Framework. NOTIFICATIONS AND POLICY DISCLOSURES To the extent that a GP claims to pursue an impact investing strategy specifically, a framework to measure,audit and report on the impacts achieved by the fund should be adopted. LPs should take into account the ability of the GP to deliver on more bespoke or detailed ESG-related disclosure requirements when formulating such requests. Conversely, GPs should take into account that LPs may have limited flexibility to change their ESG disclosure requests due to institutional policies or other requirements. Both the LP and the GP will benefit from a clear understanding of mutually agreed outputs/outcomes at the start of a fund. LPs may wish to affirm this understanding in the fund terms through a side letter, if their requirements are not already covered by any generally applicable representations made by the GP in the LPA. However, the LP understands that the GP’s approach to ESG will evolve over the lifetime of the fund or that there may be instances of confusion over LP requirements. Therefore while expectations should be made clear, there should be flexibility for adaptation and dialogue.