The ESG scorecard for Private Equity manager selection consists of 6 categories
- Investment philosophy (ethical standard)
- Fund managers attitude to ESG
- Implementation of ESG criteria in the investment process
- Membership of PRI /Global Compact
- Access to information on portfolio companies
- Exposure to ESG risk factors
The assessment is based on the manager’s strategy and plans for portfolio companies. We interview fund managers individually and in groups and seek to gain insight into whether the fund managers philosophy is consistent with our own.
Fund managers attitude to ESG
This assessment is based on marketing material and other public information and interviews are undertaken to confirm our impressions. Where possible Storebrand will ensure that agreements with managers contain the right to abstain from ownership in portfolio companies that breach our Storebrand standard for sustainable investments.
Implementation of ESG in the investment process
Our assessment of how ESG principles find their way into investment processes and value creation plans for portfolio companies.
Membership of Global Compact and PRI
Both membership and/or plans for membership are mapped during the selection process.
Access to information on portfolio companies
We map what types of information on portfolio companies is published quarterly/annually. We also map if there is reporting on ESG criteria.
Exposure to ESG risk factors
The assessment is based on a review of existing investment strategies and previous investments. If serious risk factors are uncovered, an assessment is made of the manager’s capacity and resources to manage/reduce the risk effectively.
ESG in fund manager selection process - Equities
ESG is an integrated part of the Storebrand/SPP manager selection process. The process includes qualitative and quantitative measures and assessments.
Quantitative measures include our proprietary ESG rating which covers E, S and G considerations on stock and portfolio level. We also complement internal ratings with data from our external data providers. The quantitative measures will include considerations of the current and historical portfolio characteristics, but also how well the portfolios are positioned in terms of relevant future sustainability trends.
We also rate our external funds/managers using a wide range of criteria. The main areas in this qualitative assessment are as following:
- The fund mandate with respect to ESG considerations
- Attitudes expressed, implemented policies and dedicated ESG resources in the fund organization
- Integration of ESG in the investment process
- Portfolio manager/team knowledge and attitudes
- Previous experience with the manager in question
When monitoring the external managers selected, we also use a combination of quantitative and qualitative measures. Changes in overall ratings and portfolio content is of course important, as well as ongoing periodical fund reviews with the managers where we discuss portfolio positions from an ESG perspective. Working together with our external managers to influence the portfolio companies in a better direction is also important for us, as this gives increased leverage to our internal impact potential.