Basically, VER expects the portfolio funds to commit to ESG principles, integrate these issues in its investment decisions and report on its ESG performance to investors. VER prefers funds in which the asset manager has signed the PRI – or is otherwise, on the strength of the evidence provided, deemed to act responsibly – and is thus committed to monitoring the portfolio companies’ compliance with the Global Compact platform. Many asset managers provide ESG reports voluntarily already when marketing their products, and often the information so disclosed meets VER’s ESG requirements.
ESG issues are discussed at meetings between VER’s portfolio managers and fund asset managers even after the investment is made. If any of the companies in the fund’s portfolio fails to meet the ESG standards applied by VER or if its ESG performance raises questions, VER initiates talks with the asset manager or takes other action to influence the fund’s operations. VER may also exit the fund if its portfolio companies fail to satisfy VER’s ESG standards. However, quick exits from private equity, real estate, infrastructure and private credit funds are not usually possible.