New series offers guidance on the selection, appointment and monitoring of investment managers.
The UN-backed Principles for Responsible Investment (PRI) has released three new guides for asset owners on the selection, appointment and monitoring of investment managers to facilitate better incorporation of ESG values.
The PRI said the guides reflect growing demand among asset owners for investment managers to incorporate sustainable investment principles into their investment decisions and processes. In 2019, 68% of the PRI’s 550+ asset owner signatory base addressed ESG considerations in their requests for proposals from investment managers.
“We apply a due diligence process explicitly covering ESG aspects, which along with the implementation of ESG benchmarks allows us to have both the right measurement and appropriate incentives for our asset managers in place,” said Claudia Bolli, Head of Responsible Investment at Swiss Re.
The three guides are intended to provide investors with the tools to systematically integrate sustainable investing into their selection, appointment and monitoring processes. They draw on practices from the PRI’s 2019 Leaders Group, which includes global asset owners at the forefront of ESG-driven investing, along with feedback received from a series of workshops held throughout the year.
The manager selection guide outlines the attributes of the leading approaches when selecting asset managers, covering mandate requirements, RPFs and in-depth due diligence. The appointment guide, includes 12 clauses that can be used by asset managers when writing and agreeing contractual agreements. Lastly, the monitoring guide provides a set of questions or disclosures that can be used by asset owners during the regular monitoring process, including asset class-specific reporting.
“Asset owners must be empowered to challenge investment managers, uncover greenwashing, and trigger changes in practice across ESG integration and engagement. We hope that these guides support both large and small asset owners and their advisers to incorporate ESG factors into how they relate to, cooperate with and challenge asset managers,” said Fiona Reynolds, CEO, PRI.