HMC includes ESG-related questions in the due diligence process when assessing investment managers. As part of this assessment, HMC seeks to understand the manager’s approach to responsible investment, including its ESG-related policies and how ESG factors influence the manager’s investment beliefs. We seek to identify any ESG-related risks and understand how the manager uses ESG factors to create value. Once the decision to move forward with a manager has been made, ESG-related side letter provisions may be put in place. The ESG provisions are tailored by asset class and the manager’s ESG risk (as determined in the selection process). HMC also takes the investment manager’s willingness to incorporate these provisions into their fund documents when making an investment decision.
Following the investment, HMC periodically communicates with its investment managers about HMC’s commitment to the PRI Principles and Sustainable Investing Policy, and the managers’ ESG activities. HMC tracks and reviews all periodic (generally, annual) manager ESG reports and/or disclosures. Individual discussions are held with a subset of select investment managers to better understand their approach to ESG issues and track their progress.