ESG issues are integrated into HMC's operational due diligence framework, and thus are investigated and considered at the same time as other business-related risk factors. As stipulated in HMC's Sustainable Investment Policy ("SIP"), and as part of its operational due diligence framework, HMC conducts desk-based due diligence on potential investment managers to understand how these managers address ESG issues and identify any ESG red flags. HMC assesses how external managers integrate ESG risks into their investment approach, as well as how they communicate with limited partners. HMC meets with investment managers to better understand their approach, and to ask specific questions related to ESG issues. Where appropriate, HMC includes ESG issues in the investment fund term sheet. HMC also monitors ESG performance on an ongoing basis and engages with investment managers to maintain oversight of these issues.