Investment Mandates, Portfolio Analytics, and Client Reporting

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What are some common features of ESG investing that asset owners and intermediaries seek to identify through request for proposal (RFP) and selection processes?

Portfolio performance, engagement frequency, and key performance indicators (KPIs)

Strategic asset allocation and tactical asset allocation

Voting, engagement, sustainability, and exclusions (correct)

Human rights abuses, climate change, and stewardship practices

According to the ICGN Model Contract Terms between Asset Owners and Managers, what are some areas addressed for ESG-aware investment mandates?

Strategic asset allocation and voting requirements

Good stewardship practices and portfolio performance tracking

Monitoring and use of KPIs

Integration of ESG factors into investment decision making (correct)

What is a key aspect highlighted in the International Corporate Governance Network’s (ICGN) model contract terms for ESG-aware investment mandates?

Portfolio diversification strategies

Monitoring peer-relative portfolio performance

Tactical asset allocation processes

Adherence to good practice around stewardship (correct)

What is one of the ways in which portfolios with private or unlisted security exposure may choose to report their performance?

Comparing performance against industry benchmarks Signup and view all the answers

What does the ICGN Model Contract Terms propose for ESG-aware investment mandates in terms of voting and reporting requirements?

Adherence to good practice around stewardship Signup and view all the answers

What are some common features sought by asset owners and intermediaries in ESG investing according to the text?

Screening process, engagement, and decision-making examples Signup and view all the answers

What can help guide the overall approach towards ESG investment?

Statement of investment principles Signup and view all the answers

What should trustees consider when dealing with passive/index tracking mandates in relation to ESG factors?

Considering only the index benchmark without any ESG tilts. Signup and view all the answers

What is a consideration for active equity mandates in terms of ESG factors?

Considering financially material ESG factors in company evaluation. Signup and view all the answers

What is the next challenge after clarifying the client's investment beliefs?

Reflecting operational beliefs in the fund manager's approach Signup and view all the answers

What is a challenge traditionally faced in active equity mandates regarding ESG factors?

Limited data availability and quality for quantitative analysis. Signup and view all the answers

What does aligning timeframes through fees and pay structures help with?

Fully integrating ESG issues into decision-making Signup and view all the answers

What is typically done to ensure that the mandate is fully operational?

Sending detailed questionnaires to potential managers Signup and view all the answers

In the context of active fixed income mandates, what should managers consider regarding ESG risks?

Considering the potential for ESG risks to impact credit ratings and borrowers' future repayments. Signup and view all the answers

What should asset owners ensure when aligning mandates with their beliefs and strategies?

Integration and engagement across all asset classes Signup and view all the answers

What is a possible route for integrating ESG factors in passive/index tracking mandates related to tactical asset allocation?

Considering only the index benchmark without any ESG tilts. Signup and view all the answers

What is a consideration for trustees regarding active equity mandates and the influence on companies' behavior?

Exerting influence on companies through engagement and voting. Signup and view all the answers

What should be ensured by investment managers to reflect client-relevant ESG-aware investment mandates?

Engaging with companies and issuers Signup and view all the answers

What do engagers typically focus on to reflect changes made by companies during the engagement process?

Milestones or objectives Signup and view all the answers

Which factor influences the type of ESG investing strategies that different client types (institutional, retail, private) will find attractive?

Investment objectives and risk/return profiles Signup and view all the answers

What do clients assess and challenge as part of the engagement process, in addition to having direct dialogue with the engagement team?

Engagement metrics and progress Signup and view all the answers

How long is the typical duration of an engagement process in which progress toward concrete change or better practice is measured?

More than 5 years Signup and view all the answers

What is one of the primary drivers influencing ESG investing for different groups of investors, according to Exhibit 5?

Investment objectives and risk/return profiles Signup and view all the answers

What does Exhibit 5 provide insights into regarding different types of clients and their approach to ESG investing?

Primary drivers influencing ESG investing Signup and view all the answers

What should managers consider during the acquisition and development of real estate assets?

Considering material environmental and social risks Signup and view all the answers

How can managers address potential issues and drive change in real estate?

Engage with tenants and community for feedback Signup and view all the answers

What should trustees consider when focusing on private debt mandates?

Identifying and mitigating potential ESG risks during due diligence Signup and view all the answers

What is a crucial aspect of assessing companies targeted in private equity strategies?

Assessing potential for unwanted ESG exposures Signup and view all the answers

Why should managers have ongoing dialogue with borrowers in private equity investments?

To ensure emerging and identified ESG risks are managed Signup and view all the answers

How can trustees contribute to a sustainable future in infrastructure investments?

Biasing portfolios towards infrastructure supporting sustainability Signup and view all the answers

What approach does RBC Global Asset Management take when it comes to incorporating ESG factors into their investment decisions?

Integrating ESG and business assessment with strong risk analysis Signup and view all the answers

In what way does 8 Generation Investment Management construct portfolios of sustainable companies?

By conducting deep research and analysis to select sustainable companies Signup and view all the answers

Why does RBC Global Asset Management believe ESG factors should be integrated into company assessments rather than used as a pre-screen or overlay?

To facilitate engagement and ensure ESG risks and opportunities are considered in valuation analysis Signup and view all the answers

What does 8 Generation Investment Management's differentiated thinking about company performance dynamics lead them to focus on?

Deeper research and analysis to select sustainable companies Signup and view all the answers

Why do leading fund management firms consider ESG factors as non-traditional sources of risk and opportunity?

Because they believe ESG factors can impact a business's long-term success Signup and view all the answers

How do leading fund management firms view the relevance of ESG issues across different industries?

They believe it is crucial to integrate ESG into specific industry assessments Signup and view all the answers