Abbott reviews and evaluates general partners’ ESG policies and approaches as a part of our diligence process when evaluating new investment opportunities, and monitors general partners’ reporting of and response to any ESG-related developments when reviewing active fund performance.
Abbott has appointed Matthew M. Smith, one of its Managing Directors on the Investment team, to serve as the company’s ESG Officer. Additionally, Abbott's portfolio managers are responsible for obtaining information from general partners about their ESG policies and presenting that information to Abbott's full Investment team during the investment review process. As Abbott’s ESG research efforts are conducted by the Investment team, ESG polices are factored into investment decisions throughout the investment process.
Among other considerations, Abbott incorporates several ESG factors into its decision-making process. The weighting of such factors vary from opportunity to opportunity, and in some cases, specific factors may have more importance than others. Those factors include, but are not limited to:
- The Manager's overall investment strategy and how ESG objectives relate to it
- ESG reporting capabilities
- Time horizon of the general partner's investment strategy
- Quality of the general partner's investment policy as it relates to ESG
- General partner's investment approach and how ESG objectives are implemented in their investment process
- Level of general partner's ESG expertise
- Evidence of results of a general partner's ESG implementation practices
ESG factors that do not align with Abbott’s investment objectives may cause the firm to pass on a potential investment. The main ESG factor that may affect Abbott’s portfolios is governance and incentive alignment.
Throughout the term of a private equity investment, Abbott monitors the actions of its general partners by attending their annual meetings and where possible, and obtaining advisory board seats among other things. Abbott often has the opportunity to encourage both appropriate transparency in reporting and effective governance decisions. Abbott’s participation on the advisory board of many private equity funds provides an additional forum to discuss relevant SRI/ESG developments directly with the manager and fellow limited partners. Effective risk management requires active and continuous communication between Abbott and the managers to whom we entrust our clients’ assets, and we believe that this active communication provides Abbott the ability to quickly and efficiently address developments, whether about SRI/ESG concerns, or any other aspect of the fund or industry. Abbott may review several ESG factors when monitoring general partners, including, but not limited to:
- Investment restrictions and any controversial investment decisions
- ESG portfolio characteristics
- Information on any ESG incidents
- Discussion points related to ESG policies as they arise