It is a risk if stakeholders and shareholders cannot go to public AGMs and ask the board questions. Lauren Peacock, ShareAction


We have had managers take some steps there. It is the same as in all asset classes, there are managers who are doing it well and those who are not doing it so well. Uku: The difficulty is how do we measure one manager’s perfor- mance against another because they all have different approaches.


In our case, it is more the private debt managers who we are engaging with on how they are integrating ESG. They all have dif- ferent ways of doing it and use different metrics to measure it, so it is difficult to compare what they are doing. I am thinking about the world after we emerge from the Covid pandemic and if it is going to impact the progress made so far on ESG because companies will be given concessions around disclo- sure as they will have other pressures they are managing. We might see more focus on the S because companies will be con- cerned about the safety and welfare of their employees, such as managing this two-meter rule. There will be lot of expenses for companies post-Covid and how will that impact ESG going forward. Barrie: Last year we began a 10-year private equity mandate with Cambridge Associates. We asked ESG-related questions across the appointment process.


What struck us was that the GPs in private equity have an extraor- dinary ability to influence the underlying companies they invest in. They typically sit on the board and have operational involve-


ment, so have a great position to do ESG.


What is more difficult is that you are relying on the GP to do that for all their constituent companies and the reporting lines are not as clear or consistent. The ESG plumbing is not there in the way that it is in public equities. We are working with Cambridge and have put in place ESG moni- toring and analysis. In private equity there is a huge opportunity to do this, but it is less developed and standardised than in public equity.


PI: What information are you using to assess managers, Anita? Bhatia: There needs to be a flexible approach to reviewing the information. Information from equity managers is quite different from information that we get from our private equity, venture cap- ital or private debt managers.


There needs to be some open mindedness and flexibility, so in our due diligence review or monitoring, we look at different factors. Managers who are signatories of the United Nations’ Principles for Responsible Investment are making great progress in encour- aging the membership to integrate ESG principles. What is important is transparency. We are invested in some global equity managers who are impressing us in terms of the informa- tion they share about their underlying companies, but we are see- ing a lot of well-meaning initiative and effort by private market managers as well.


May 2020 portfolio institutional roundtable: ESG 13


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