EIG is committed to promoting sustainable practices in its own affairs as well as through the investments that are made by the funds EIG manages. EIG first adopted responsible investment guidelines in 2010. Since then, EIG has enhanced and broadened its focus on ESG issues associated with its investments.
EIG conducts ESG-specific diligence to assess financial considerations relating to sustainable development, environment stewardship, social equity and corporate governance. For each new prospective investment, the investment recommendation will include a section specifically addressing the ESG risks and mitigation measures identified during the diligence process and deemed by the ESG Committee to be relevant to the investment committee. EIG has a formal ESG policy, that is well integrated within EIG's investment process. Investment professionals concentrate on key areas when conducting due diligence on transactions, and consider the UN PRI focus areas. Additionally, the ESG Committee is integrated in the day-to-day deal team diligence and frequently communicates relevant ESG issues that need to be addressed as part of diligence, and EIG engages external advisors, as appropriate, to assist in performing due diligence on social, governance, and environmental issues
In addition to pre-investment ESG due diligence, and as applicable, EIG considers ESG in its closing process. For example, obtaining representations, warranties, and covenants in our investment documents serve as an important supplement to our ESG diligence practices. Through these features we are generally able to require portfolio companies to report certain ESG issues to EIG both at the time of the initial investment and on an ongoing basis.
After an investment is made, covenants in our investment documents may require (i) periodic (both quarterly and annual) reporting on select ESG metrics, and/or (ii) notification by portfolio companies on the occurrence of specific events that implicate ESG concerns. Additionally, quarterly asset-by-asset reviews are conducted by EIG investment professionals and senior management with specific reference to ESG incidents or issues. Further, EIG seeks to maintain board of director seats and/or board observation rights which allow EIG to monitor, initiate, and participate in ESG discussions at the portfolio company level.