Environmental, Social, Governance (“ESG”) investing is a rapidly growing area of focus for investors, particularly among the sovereign wealth, public and corporate pension, and endowment and foundation communities.
To date, the majority of ESG investor engagement has focused on underlying investments, be they public companies issuing stocks or bonds (with such companies often "scored" by various ESG data vendors) or private equity portfolio companies.
However, as ESG becomes a more institutional discipline, the accuracy and quality of asset manager ESG activity is now under close scrutiny. In particular, investors are wary of “greenwashing”, when an asset manager exaggerates the extent of ESG integration in their investment strategy.
Manager supplied ESG data is a great start, but self-reported, unverified information should clearly be subject to due diligence. Does the asset manager actually do what they say they do? Are investment manager policies comprehensive - or is the manager's ESG policy simply a "tick the box" statement? Is the investment firm leading - or lagging - its peer group in terms of ESG behaviours?
Castle Hall has leveraged our decade plus history of award-winning operational due diligence to create ESGDiligence. This new tool offers investors a systematic and efficient process to evaluate ESG risks across an external manager portfolio at two levels - the investment strategy and the management company itself. Castle Hall also offers Reputational Due Diligence, which enables investors to monitor their asset managers across adverse media, legal and watchlist databases and regulatory filings.
Due Diligence to assess the ESG characteristics of asset management companies.
Within their own businesses, do your asset managers display environmental, social and governance best practices? Do your managers - vendors in your "supply chain" - run their businesses aligned with your own culture and organizational priorities around E, S and G?
Castle Hall offers a weekly ESG newsletter, regular blog posts, and white papers, webinars and reference materials within ESG Diligence University.
Browse through our website to access content on ESG issues facing the investment industry today - and tomorrow.