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Universities Superannuation Scheme - USS

PRI reporting framework 2018

Export Public Responses

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PE 01. Description of approach to RI

01.1. プライベートエクイティの責任投資に対する組織のアプローチの概要を説明してください。

USS's direct holdings in private equity are direct investments or via co-investments with a private equity General Partner (GP). 

Enhanced Due Diligence

USS has adopted an Enhanced Due Diligence (EDD) process applicable to direct and co-investments in privately held equity assets and adapts these to suit the particular circumstances of the deal.  

The EDD process seeks to identify any material legal, ethical, governance, reputational, environmental and social risks that could potentially affect the value of the investment and explores whether there are appropriate processes in place to mitigate these factors. 

The process includes investigative searches on the key individuals and any partners involved in the deal. Due diligence is frequently underpinned by site visits by the deal team and operational due diligence team to review the assets, assess operational capabilities, meet management and diligence counterparties offices. 

The RI EDD process may consider (but is not limited to) ESG issues such as:

  • Health and Safety management and performance.
  • Environmental management and performance including systems controls, pollution control, noise control and liabilities such as contaminated land and asbestos.
  • Exposure to climate change related risks.
  • Stakeholder relations, including planning, regulators, local communities and employees/ unions.
  • Governance, including internal controls, anti-bribery and corruption processes, key man risk, remuneration and alignment, other shareholders and board directorships.

Questions on ESG risk and risk management will be directed to the deal team, the asset and/or the GP (for co-investments).  With co-investments, USS will have already undertaken ESG due diligence on the private equity managers.  This process is described in detail in SAM.  If the deal were to involve a new GP, we may also ask them to complete our Private Equity Questionnaire (outlined in SAM02.5). The scheme will also perform counterparty risk assessments for other potential partners in any deal. 

The EDD process feeds into the investment decision process, with key ESG risk and mitigating factors highlighted in the Private Markets Investment Committee investment memo's, upon which the final investment decision is taken.

For direct investments where the due diligence process has identified ESG concerns, USS will work with the asset's management and / or other investors before or post investment to address such concerns, if appropriate. Depending on the level of direct investment, USS will typically seek and obtain board positions and/or information rights to enable effective regular oversight of the asset.  

The EDD policy is available at

A detailed write up of USS's process was used as an LP (limited partner) case study in a chapter in "Value Creation Through Responsible Investment: A Guide to Effective ESG Management in Private Equity" for Private Equity International in December 2016. See for an extract on the book.



​The scheme has an Asset Management and Operations team within the Private Markets Group (PMG) that oversee the on-going monitoring for the largest directly-held assets in the private markets portfolio, including infrastructure assets. USS undertakes post investment visits which cover, amongst other issues, reviews of the quality of management of environmental and social issues at direct infrastructure assets.  For co-investments, whilst the due diligence process is similar to our direct asset investments, post investment our control is limited by the LP:GP relationship:  the GP has complete responsibility for management and oversight of the investment including ESG issues. 

RI team undertakes ESG review meetings to infrastructure assets to have face to face discussion on how the asset’s managers are addressing ESG / CSR risk and opportunities.  This programme is unusual:  we are not aware of many asset owners implementing such a detailed and diligent approach to asset oversight on ESG issues.  This programme is currently ad hoc, but we plan to make it more systematic in future.  These asset assessments involve deep dives into the asset so that management can be interrogated with asset specific questions. Examples include issues such as:  

  • Contractor oversight
  • Human capital management
  • Waste
  • Water
  • Energy
  • Water
  • Air-pollution
  • Community relations and noise
  • Health and Safety

In addition, the RI monitoring processes were enhanced during the year. In conjunction with the internal Private Markets Group (PMG), the RI team developed a process to more systematically review ESG management at the schemes' direct assets.

For corporate governance, an IFC governance assessment model has been adapted to reflect the nature of privately held assets. On environmental and social issues, USS has joined the GRESB Infrastructure benchmarking process. The results of face to face monitoring meetings with assets noted above also feed into the assessment process.

The reviews feed into PMG's regular Portfolio Review Committee meetings and enable a more comprehensive assessment of the current status of ESG management at the assets to help identify priority areas for enhancing ESG management practices.


USS's approach

USS has long-encouraged a wider understanding regarding ESG matters within the private equity industry. Representatives of the scheme regularly speak at industry events, sharing USS's experiences and approach. This helps raise awareness of USS's expectations on stewardship and investment beliefs.

Representatives of the scheme sit on the PRI's Private Equity Advisory Group and Private Equity Reporting and Monitoring Guidance working group. USS also participates in the British Private Equity & Venture Capital Associate (BVCA), where the Head of Private Markets Group sits on the LP Committee.

USS contributed to several publications in 2017 regarding the integration of material ESG considerations into private equity. These include:

  • LP Perspectives, USS as a responsible investor - 

Private Equity Engagement: Post-Investment Monitoring Is Critical -   

A Co-Head of RI spoke on ESG in private equity at industry events including

  • The Asian Venture Capital Journal’s (AVCJ) 30th anniversary Conference on Fund reporting: Setting new standards for transparency.
  • The AVCJ’s RI conference on LP-GP reporting and dialogue on ESG: Where are we now?
  • The PEI RI forum in Berlin on Considering the evolution of the LP/GP relationship: Are we drowning in data?  

Further, USS responded to the UK Government's Green Paper on Corporate Governance Reform during the year, outlining the scheme's views on governance concerns and reporting for privately held UK companies. See 

PE 02. Investment guidelines and RI

02.1. 組織の投資活動が、責任投資ポリシーを指針としているか、責任投資ガイドラインに従っているかを示してください。

02.2. 投資活動におけるESG問題に対するスタッフおよびポートフォリオ企業のアプローチへの期待について、どのように組織がその概要をまとめているか説明してください。 [任意]

The Enhanced Due Diligence Process forms part of the investment process for private equity at USS and is in line with the scheme's Statement of Investment Principles and approach to responsible investment which covers all asset classes - see and 

Please also see our response under PE 01 for further information on the sorts of issues considered within the due diligence.