The bulk of our effort goes into the selection and appointment processes. We use our investment consultant's ESG and investment ratings of prospective managers as a starting point, but we research and meet with managers to come to our own conclusions. We particularly want to see our managers, and potential managers, acknowledging all risks in their investment processes, so not just the conventional short term business risks inherent generally in any investment, but also the longer term risks relating to climate change, societal and demographic changes, regulatory threats relating to ESG issues as well as what we might call moral issues.
We always like managers that have an instinctive affinity with our own ethical world view, good examples being our private debt manager and our emerging market sovereign debt and equity managers. In practice, we give as great a weight to such qualitiative measures as to more quantitative ones.
We acknowledge we could do more in terms of ongoing ESG monitoring of existing managers, but our consultant (Mercer) puts substantial resource into monitoring managers in its research universe for attention to ESG and SRI, and that is a constant referenec for us.
Mercer's capability in researching ESG and the importance the firm gives to ESG and SRI in its advice to clients were significant influencers in the firm's initial appointment as consultant 8 years ago and in its re-appointment 2 years ago.