Responsible Investing / ESG
AVCAL understands how vital responsible investment and environmental, social and governance issues (ESG) are to investors in our industry and to private equity and venture capital managers. That’s why we were involved in the development of the UNPRI and the ESG Disclosure Framework from their beginnings.
United Nations Principles for Responsible Investing (UNPRI)
In August 2009, the AVCAL Council invited AVCAL GPs to seriously consider signing the UN-backed Principles for Responsible Investing (PRI). This was done after consultation with industry through a Responsible Investing working group of the Council. The Principles were developed by an international group of investors to put responsible investing principles into practice. Since this was done, the ESG framework was developed to help GPs understand and prepare for their LP reporting and disclosure.
More information on the principles is below.
New resource for UNPRI Signatories
The Principles for Responsible Investing (PRI) has now produced a practical guide to help general partners (GPs) develop their own approach to responsible investment. The guide gives GPs practical guidance to develop a framework for the integration of ESG factors into their investment activities, which is linked for the first time with organisational governance, structure and culture. LPs can use the guide to understand the different ESG integration practices being implemented in the market, which will facilitate more informed discussions with their GPs during both fund selection and monitoring.
Over 50 GPs and LPs worldwide were interviewed to inform the development of the guide, with additional references and case studies available in a supporting publication. The PRI engaged Spring Associates, a strategy consulting firm, to conduct the research and develop the content for the guide, which was co-written by the PRI Secretariat with input from the PRI GP Guide Working Group.
Integrating ESG in private equity: A guide for general partners – Full
Environmental, Social and Corporate Governance (ESG) Disclosure Framework for Private Equity
The ESG Disclosure Framework, launched in March 2013, aims to help General Partners better understand why Limited Partners want ESG related information, and to help rationalise the types of questions that LPs are increasingly asking GPs on ESG.
A growing number of general partners (GPs) and their limited partner investors (LPs) are adopting a more structured approach to managing environmental, social and corporate governance (ESG) risks and opportunities. One reason for this is a conviction that companies that address ESG issues can achieve better growth, cost savings and profitability, while strengthening stakeholder relations and improving their brand and reputation. GPs, LPs, associations, and the private equity industry at large have an aligned interest in communicating how the management of ESG factors contributes positively to risk-adjusted returns.
This framework was developed by 40 LPs (including Australian) and 20 private equity industry associations (including AVCAL) and a number of GPs.
Download the March 2013 framework.
Author: Adrian O’Shannessy, Director, Greenwoods & Herbert Smith Freehills