We seek ESG information from investment managers from questionnaires, reviewing manager ESG/RI policies and ESG-focused discussions with current and prospective investment managers. Moreover, for LE strategies, we score the manager’s portfolio and a benchmark portfolio from an ESG perspective using MSCI’s ESG rating methodology and use the output of this analysis to have more detailed conversations on ESG integration with the managers. For all asset classes, the objective of all of this work is to help us better understand how the manager thinks about ESG factors within the context of its investment strategy and process. This information, in combination with an assessment of the relevance of ESG to the strategy (e.g. considering the strategy's time horizon), is used to determine an ESG rating for the manager, which is considered along with non-ESG metrics, when evaluating current and prospective managers.
It is important to note that we do not assign a weight to ESG considerations, or any other consideration for that matter, in our manager selection and monitoring process. Instead, we take a holistic approach and evaluate all considerations together (i.e. we take a “mosaic” approach). We believe that adding this additional ESG “lens” to our process leads to more informed decision-making on our part, and ultimately results in better decisions.