We request and review information on responsible ownership policies and practices by Managers as part of the ESG due diligence process, which includes information on active ownership and engagement.
Our ESG DDQ is implemented for both private and public assets. The ESG DDQ is based on PRI’s template and looks at four categories of issues: 1. Overall approach to ESG/responsible investments, policies and awareness; 2. Capacity to identify, measure and manage material ESG risks and opportunities; 3. Responsible ownership; and, 4. Reporting and disclosure. A scorecard and a rating system complement the ESG questionnaire in the due diligence process. Managers are assessed on the basis of their responses to the ESG DDQ, as well as any other additional information provided during the selection process (e.g. complimentary information, relevant documents, interviews, etc.), and are assigned a given score and rating. The score and rating are intended to facilitate internal understanding of the level of confidence in the manager’s approach to ESG/responsible investments, and comparability across asset classes and portfolio. This also is intended to serve as a starting point for discussions with managers at the monitoring stage, and will determine priorities for engagement at the manager level. We observed that some managers decided to formalize their ESG policies as a result of this interaction. Others also expressed interest in signing up to the PRI, which is one of the questions included in the DDQ.