During Pathway’s extensive due diligence process, a due diligence questionnaire is sent to the general partner requesting information pertinent to Pathway’s analysis of the investment opportunity. The request addresses, among other things, how the general partner has incorporated ESG issues into its investment decision-making process and the effect that such incorporation has had on its decision to invest. Pathway seeks to understand the general partner’s operational capabilities, transparency, and sustainability; the governance practices of a fund or portfolio company; and the industry focus and geographic operation, as well as other social or environmental impacts of a fund’s investments. Pathway also considers (a) a general partner’s stance regarding UNPRI; (b) the extent to which ESG issues are incorporated into the general partner’s policies and into its investment analysis and decision-making processes; (c) the extent to which the general partner addresses ESG issues with the companies in which it invests; and (d) the guidance given by the general partner to its portfolio companies. Their responses are viewed and analyzed based on their investment strategies, and any material concerns are discussed with the general partner for clarification and corrective action. If a material ESG issue arises, it is presented to the Investment Committee to determine further action.
During the due diligence process, Pathway works to address material ESG issues that were revealed during its due diligence and also works to set appropriate ESG measures with the general partner. Pathway’s in-house counsel and deal team discuss the relevant material ESG issues and seek to set appropriate terms with general partners. Pathway requests that the general partner communicate any material ESG issues that arise in the investment partnership portfolio during the life of the partnership.
Pathway makes a concerted effort to be aware of a general partner’s ESG practices through monitoring. The Company seeks to monitor and influence the behavior of an investment partnership on a range of matters, including ESG factors. Pathway interacts with general partners throughout the year to better understand the general partner’s consideration of ESG issues. If requested, Pathway will provide to the general partner materials related to ESG issues, with the goal of expanding the general partner’s knowledge of ESG practices within the private market industry.