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KLP

PRI reporting framework 2019

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You are in Indirect – Manager Selection, Appointment and Monitoring » Selection

Selection

SAM 02. Selection processes (LE and FI)

02.1. Indicate what RI-related information your organisation typically covers in the majority of selection documentation for your external managers

Your organisation’s investment strategy and how ESG objectives relate to it

ESG incorporation requirements

ESG reporting requirements

Other

No RI information covered in the selection documentation

LE

FI - Corporate (non-financial)
Private equity
Property
Infrastructure
Your organisation’s investment strategy and how ESG objectives relate to it
ESG incorporation requirements
ESG reporting requirements
Other
No RI information covered in the selection documentation

02.2. Explain how your organisation evaluates the investment manager’s ability to align between your investment strategy and their investment approach

Strategy

Assess the time horizon of the investment manager’s offering vs. your/beneficiaries’ requirements

Assess the quality of investment policy and its references to ESG

Assess the investment approach and how ESG objectives are implemented in the investment process

Review the manager’s firm-level vs. product-level approach to RI

Assess the ESG definitions to be used

Other

None of the above

LE

FI - Corporate (non-financial)
Private equity
Property
Infrastructure
Assess the time horizon of the investment manager’s offering vs. your/beneficiaries’ requirements
Assess the quality of investment policy and its reference to ESG
Assess the investment approach and how ESG objectives are implemented in the investment process
Review the manager’s firm-level vs. product-level approach to RI
Assess the ESG definitions to be used
Other
None of the above

ESG people/oversight

Assess ESG expertise of investment teams

Review the oversight and responsibilities of ESG implementation

Review how ESG implementation is incentivised

Review the manager’s RI-promotion efforts and engagement with the industry

Other

None of the above

LE

FI - Corporate (non-financial)
Private equity
Property
Infrastructure
Assess ESG expertise of investment teams
Review the oversight and responsibilities of ESG implementation
Review how is ESG implementation enforced /ensured
Review the manager’s RI-promotion efforts and engagement with the industry
Other
None of the above

Process/portfolio construction/investment valuation

Review the process for ensuring the quality of the ESG data used

Review and agree the use of ESG data in the investment decision making process

Review and agree the impact of ESG analysis on investment decisions

Review and agree ESG objectives (e.g. risk reduction, return seeking, real-world impact)

Review and agree manager’s ESG risk framework

Review and agree ESG risk limits at athe portfolio level (portfolio construction) and other ESG objectives

Review how ESG materiality is evaluated by the manager

Review process for defining and communicating on ESG incidents

Review and agree ESG reporting frequency and detail

Other, specify

None of the above

LE

FI - Corporate (non-financial)
Private equity
Property
Infrastructure
Review the process for ensuring the quality of the ESG data used
Review and agree the use of ESG data in the investment decision making process
Review and agree the impact of ESG analysis on investment decisions
Review and agree ESG objectives (e.g. risk reduction, return seeking, real-world impact)
Review and agree manager’s ESG risk framework
Review and agree ESG risk limits at athe portfolio level (portfolio construction) and other ESG objectives
Review how ESG materiality is evaluated by the manager
Review process for defining and communicating on ESG incidents
Review and agree ESG reporting frequency and detail
Other, specify
None of the above

If you select any 'Other' option(s), specify

KLP includes a side letter for all private equity investments outlining our guidelines on responsible investment, for example, that KLP does not invest in companies that produce tobacco or that obtain 30 percent or more of their revenues from coal-based activities. As the investments are blind, KLP is not aware of which companies will be a part of the portfolio at the time that the external manager is selected. The side letter provides therefore that the fund manager will notify KLP in the event that any investment would violate "Guidelines for KLP as a responsible investor" and that KLP retains the right to be treated as an excused investor with respect to that investment.

KLP includes a supplier decleration letter for external managers for listed equity, fixed income and infrastructure, however they are not obliged to sign and some have chosen not to. In those cases KLP has to asess the external managers investment policy to make sure it is aligned with KLPs. 

02.3. Indicate the selection process and its ESG/RI components

          KLP systematically reviews LPs' Investment Due Diligence Questionnaire, which may include items related to responsible investment. It does not, however, require a separate responsible investment due diligence questionnaire.
        

02.4. When selecting external managers does your organisation set any of the following:

ESG performance development targets

ESG score

ESG weight

Real economy influence

Other RI considerations

None of the above

LE

FI - Corporate (non-financial)
Private equity
Property
Infrastructure
ESG performance development targets
ESG score
ESG weight
Real world economy targets
Other RI considerations
None of the above

If you select any 'Other' option(s), specify

KLP will not make investments in a PE fund unless the KLP side letter is accepted. KLP encourages, but does not reguire, general partners to become UNPRI signatories, if they are not already. 

Furthermore KLP will not select external managers that do not comply with KLPs guidelines for responsible investment. 

02.5. Describe how the ESG information reviewed and discussed affects the selection decision making process.[OPTIONAL]

          
        

SAM 03. Evaluating engagement and voting practices in manager selection (listed equity/fixed income) (Not Applicable)


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