Responsible investment considerations are guided by our Responsible Investment Policy, which forms part of the Golding organizational manual and thereby applies to the entire organization as of its publication date. The policy is reviewed regularly and modified accordingly.
Responsible investment and ESG criteria form an integral part of our investment process and related aspects are taken into account both before and after the investment decision. Therefore, a multi-stage management approach has been implemented (from initial market screening/ contact to due diligence, the investment decision and ongoing monitoring) which applies to all investments regardless of the actual type and/or origination channel.
As for the actual assessment of the investment manager, we have developed our own proprietary assessment framework with the help and assistance of leading responsible investment and ESG consultancy Tauw. Over several quarters, we have defined the processes and built the models that guide us in our day-to-day due diligence work. Usually, our ESG assessement process starts with a comprehensive review of the information that is easily accessible (UN PRI database, website) and information that has been provided to us (dataroom). Next, we typically send our ESG questionnaire to the investment manager, which entails 31 questions across five categories (ESG values, organization, due diligence, ownership, reporting). Based on the answers we receive from the GP, we will then fill our Excel-based assessment tool to the best of our knowledge (same five categories, but 20 sub-segments overall) or ask follow-up questions where needed. As a result, the Golding assessment framework assigns scores on a scale from 0-10 for each sub-segment (0 = no info, 1= insufficient, 2-4 = initial, 5-7 developing, 8-10 leading). In order to ensure compliance and objectivity, we have designed the tool accordingly (e.g. Excel lists examples needed to achieve "leading" for each sub-segment) and all members of the investment team are being trained regularly on the tool. Besides assigning scores, the individual investment team members also take notes on highlights, opportunities for improvement and recommendations to the GP. Combined with the scoring, these findings are then integrated in every investment committee paper (standardized slides, which also include a benchmarking across segments with the respective peer group of GPs).
Once invested, we work to obtain information from the fund manager on their ESG performance and that of their individual investments (formalized/safeguarded by side-letter clauses that we negotiate with every GP ahead of our commitment). On this basis, we aim to identify opportunities for improvement and discuss our findings with the fund manager. Interestingly, we find that more and more GPs (esp. on the credit side) are interested in responsible investing and we get more and more questions on best practices from the managers' respective competition.
Whenever we encounter potentially adverse developments or receive meaningful information that would pose a potential conflict to the agreed upon responsible investment guidelines or to our own ESG policy, we take immediate action and seek clarification. While the closed end nature of the funds we invest in certainly limits the set of actions/ sanctions we can take, we are not afraid to address our concerns vis-a-vis the investment managers and/ or the advisory board for resolution. If necessary, we will seek to engage with other investors to form a necessary coalition to be able to voice our concerns with meaningful impact. Certainly, we would not re-invest with a manager that has demonstrated to not adhere to the standards we deem important.