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You are in Indirect – Manager Selection, Appointment and Monitoring » Outputs and outcomes
One of our private equity managers wanted us to participate in their next fund. Our existing rating of the PE manager was sub-standard - ie. below that of other managers and they did not have an ESG policy in place.
In order for us to consider any future investment we indicated that the manager needed to adopt a policy and provide more reporting. This was adopted by the manager and we invested in their next Fund.
Lack of ESG reporting or knowledge
We had identified as part of our ongoing manager monitoring that the ESG integration capabilities of this firm was low. We asked for reporting to be enhanced and for staff to undertake training
External consultants were brought in to undertaken ESG integration training for all staff and reporting has been enhanced.
One of our VC managers is very good at identifying ESG opportunities however, needed assistance to identify and improve ESG risks. They don’t have any specialised ESG resource and are working with very early stage companies with low resourcing.
A member of the FSS Responsible Investment team accompanied the Assistant-Portfolio Manager from the FSS PE team to present to the whole VC firm on the importance of identifying ESG risks and the material risks for each industry segment. We also discussed resourcing and the VC fund is considering whether to hire an ESG specialist or improve the training for the existing team. This showed a willingness to improve and learn in the integration of ESG. It is important as we are currently considering providing further capital to them for their next fund.
We recently appointed 2 new Australian listed equity managers. ESG assessments and scoring as well as face to face meetings were carried out.
The FSS Responsible Investment team worked with the FSS Australian Equities PM to analyse the impact of appointing the new managers on the weighted average ESG assessment score for the portfolio. It was a key part of the decision making that the new managers that were appointed improved the overall ESG manager score of the portfolio.