November 24, 2016
Interviewed by: Privcap
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The LP Case for ESG Webinar

Privcap presents a fascinating conversation with two investment officers at North Carolina Department of State Treasurer who conducted research benchmarking ESG policies and impact across major institutional investors.

This 45-minute, interactive expert webinar will teach you:

  • Why should an institutional investor consider implementing an ESG program?
  • How did North Carolina design its research project?
  • What were the key findings of the research, completed in September of this year?
  • How do endowments and foundations differ from US public pensions in their focus on ESG?
  • What are the range of ways that ESG is defined for investment institutions?
  • What evidence is there that ESG has an impact on performance?
  • What is the difference between ESG programs for public markets and for private equity?


Privcap presents a fascinating conversation with two investment officers at North Carolina Department of State Treasurer who conducted research benchmarking ESG policies and impact across major institutional investors.

This 45-minute, interactive expert webinar will teach you:

  • Why should an institutional investor consider implementing an ESG program?
  • How did North Carolina design its research project?
  • What were the key findings of the research, completed in September of this year?
  • How do endowments and foundations differ from US public pensions in their focus on ESG?
  • What are the range of ways that ESG is defined for investment institutions?
  • What evidence is there that ESG has an impact on performance?
  • What is the difference between ESG programs for public markets and for private equity?


The LP Case for ESG

David Snow, Privcap: Hello and welcome to a Privcap webinar. My name is David Snow, co-founder and CEO of Privcap. Today, we have a great conversation for you about the role that ESG can play in private equity and the power of value creation that ESG can potentially have for those investors who have it well established in their program. We are very fortunate to have three people who have spent a lot of time thinking about and doing work into ESG from an investor’s point of view. I’m going to ask them to introduce themselves briefly, starting with Melissa Waller from the North Carolina Department of State Treasurer.

Melissa Waller, North Carolina Department of State Treasurer: Thank you, David, and thank you for having us on the webinar today. I am Melissa Waller. I am the deputy treasurer for the North Carolina Department of State Treasury. I serve under Treasurer Cowell and I also chair our corporate governance committee in-house.

Snow: Great. Sondra, please give us a quick introduction.

Sondra Vitols, North Carolina Department of State Treasurer: Thank you, David. My name is Sondra Vitols and I’m a senior investment officer within our investment management division in the North Carolina State Department of Treasury. I work and report to our chief investment officer and my team was responsible for working with Melissa and her corporate governance team for our ESG research effort, which culminated in the delivery of our recent policy.

Snow: Great. And, live from London, we’re very pleased to be joined by Natasha Buckley from the UN PRI. She is going to be making some introductory remarks. Natasha, please take it away.

Natasha Buckley, Principles for Responsible Investment: Great. Thank you, David. Yes, I’m very pleased to introduce this webinar today by giving a brief introduction to the PRI initiative and our private equity program here, which I manage. The Principles for Responsible Investment (PRI) were launched 10 years ago. They were developed by investors for investors and they promote responsible investments. We now count over 1,600 signatories to our principles from over 60 countries.

The principles themselves are not prescriptive; each signatory will decide on their own approach to responsible investments. What unites our signatories is the belief that the consideration of environment, social and governance factors will lead to better-informed investment decisions. So, it’s not necessarily about what you invest in, but how you invest and being better placed to identify investment risks and investment opportunities.

We have witnessed a tremendous update of ESG integration by private equity investors and there is, of course, that natural alignment between the stewardship style of private equity investing and responsible investment. We provide an active platform for collaboration between LPs and GPs on this. We enjoy strong partnerships with our private equity association partners, including the ILPA, the American Investment Council, EMPEA and Invest Europe. Our work is currently focused on streamlining the ESG reporting efforts between LPs and GPs.

But today, we’re very excited to hear the North Carolina Department of State Treasurer present their findings and we really applaud this incredible statement of leadership and stewardship, which will help to move adoption of responsible investments among mainstream investors across the country. We currently have 22 asset owners signed up to the PRI in the U.S. across seven states and we are witnessing growing interest from their peers. The work that North Carolina Department of State Treasurer has done truly embodies the spirit of the principles—that of promoting acceptance of responsible investment and of industry collaboration. We expect it to have significant affects on the momentum of their responsible investment agenda in the U.S., so we are very much looking forward to hearing what Melissa and Sondra have to say.

Snow: Great. Thank you. Here’s a question, starting with Melissa. What led your organization to determine that it needed to do a deep dive into the role that ESG can play in an institutional portfolio?

Waller: Sure, David. I think it is best to start at the beginning of understanding why a large institutional investor would come at it from this perspective. For us, it really did factor in to the work that our corporate governance team was focused on around long-termism, as well as our CIO and Sondra Vitols and her team and the work they were looking at from the investment due-diligence process and how you best would incorporate elements of all of this, as far as long-termism and good investment best practices.

Under Treasurer Cowell’s tenure and our CIO’s tenure, we were fortunate enough to have the ability to look at it holistically across the department. I think that, when you look at different institutional investors or different groups, sometimes the corporate governance, or even the governance pieces alone, go in one direction and the investment philosophies or investment policy statements go in another direction. So, for us, it was really important to have this collective collaboration on where our goals were and where we were setting those from an institutional investment and looking at long-termism being a part of that.

Then, looking specifically as ESG pertains within that, we determined that it would be a great way to have this research project that would give us a due-diligence phase and a learning phase to go through and look at our peers and folks and how they’ve done this well in the past, as well as things that are trending in the future and best practices that we not only looked at abroad, but also domestically. Then, take some of that collaboration and look at best practices across all of those. And, if you look at the project-design slide—I think that’s slide 2, David—you can see, and I know Sondra will get into the specifics of this, that we really did design it around the different phases that would be included in this where we started from the investment perspective as well as the corporate governance perspective, identifying values, emissions and aspirations investment beliefs and doing a survey among our investment team, among the corporate governance team and our treasurer and folks within the department that drive at those pieces.

Then, also looking at where we would find the expertise externally that would influence or could give us or provide us best practices. What are the pieces that contribute to financial performance of a company? Where should we have governance issues aligned with our due-diligence processes? Which matters come up within ESG aligning with the asset classes does not even factor into it. How have ESG target investments performed? Where are these specialty items that we’re trending or we’re seeing? Does it matter? Can ESG considerations mitigate downside risks? Those are always things that the investment team is looking at. How do you offset proactively those risks and how they align?

Then, how are our peers addressing that? I think a really interesting part that you’ll get to is what we found from our peer groups, both domestically and internationally. But also the folks who are in the family offices and the foundations that might come at this and sovereign wealth groups, maybe from a different perspective and trying to cultivate the best of all of those things aligned for us. Most importantly, looking at our values and vision for the department and how we would align those within our investment practices, but also the governance practices of the corporate governance team itself. Sondra, I don’t know if you want to add to that, but I know there were several pieces that you were insuring were in our process.

Vitols: Thank you, Melissa. I think that’s a great overview of where the work originated and our decision to holistically align the corporate governance effort with our portfolio management. I think it just may be helpful to lay out what our pension plan portfolio looks like. We currently manage about $90 billion in assets—which are allocated across both public and private market investments—and we do a variety of internal management, direct trading and securities selection as well as external managers, which includes our private equity exposure.

We have a dedicated private equity asset class, which is a return-seeking portfolio. In addition, we have other types of private market and private equity investments that rest in portfolios that are more for diversification and hedging purposes. One thing we hoped to do right off the bat with our research project was to view it through the lens of thinking of these issues as factors and not approaching it with any given ideology in mind—either being potentially pro-sustainable investing or against it—but treating it almost as a factor-based exercise to see what, if any, of these issues either impacted attribution among our investments or could help with mitigation of longer-term risks embedded in our portfolio.

Though, in addition to our approach being very collaborative with the work being done by Melissa and the corporate governance group, we thought about this from a perspective of portfolio construction, risk management and specifically the kind of portfolio we have at the full pension-plan level. One of the approaches we adopted early on was this idea of materiality. I’m sure, as all of the folks that have worked in this space recognize, there are myriad environmental, social and governance issues that matter to a variety of stakeholders. Our perspective was formed by being a long-term investor and focusing on those that had material impact either on performance attribution at the public company level, then looking at how that might matter across asset classes and investment strategies.

Then, thinking about some of those issues as potential risk factors that may not currently be incorporated in our enterprise-wide risk management. Again, we viewed this as an open-ended exercise to see what, if any, of this mattered to us as investors and for the specific type of portfolio we had. As Melissa mentioned, part of that exercise involved doing a benchmarking study where I and our full team interviewed 91 institutional investors—including 61 of our peers in the U.S. public-plan space, 19 of the largest endowments and foundations and 11 sovereign wealth funds—to assess their level of activity around responsible investing and, equally importantly, to see how that activity correlated with the reason for their existence as investors and specifically how that related to the type of portfolio they managed and the governance piece embedded in it.

We also started grappling with issues around ESG data and standardization. There is a heck of a lot of information out there, but if you’re an investor, there are challenges with pulling out a signal from noise in that space. That relates to the fact that, currently, most of the data is self-reported and there isn’t a standardized way of reporting. Then again, each investor has to do the filtering to see what is material. In regards to the materiality issues, we did a rather extensive review of the academic literature involved—which is a cottage industry at this point—and seeing what different academics had shown about how specific issues in this space correlated with financial and economic performance.

Then, I would say, also to elevate the internal discussions we were having among the investment staff, since this is a rapidly evolving area. I will say, as a former structured credit person, this is one of the few areas where I’ve encountered as many acronyms as you’d find in structured credit with perhaps a wider understanding of the meanings of those terms. We also launched a 13-part educational series and we invited practitioners, academics and consultants, and had several round-table discussions with our peers from the three categories I mentioned, to talk about whether or not they thought engaging in this helped with performance and in what areas. Similarly, whether they did this for risk-management issues and their thoughts around best practices from that.

This was a really intensive, 18-month process. Again, it was very imperial and pragmatically driven and that ultimately resulted in our long-term stewardship policy. At a high level, the three pillars of that came from the key findings in our research project. The first one being, we opted to approach this area through integration versus direct capital allocation. In addition, you can see from just the discussion that Melissa and I have had, it was very much a bottoms-up approach focused on ESG, identifying these as material performance or risk factors and then trying to think about how that played out across different asset classes.

Then, in linking to our corporate governance activity as well, we generally found evidence supporting engagement on issues versus taking a divesting approach. That can mean using this lens materiality to identify issues where we can engage certain companies regarding their corporate behavior. But that also implies, for us, that we’re not using negative screening or necessarily divesting assets based on that as we believe both in terms of altering behavior. It’s more impactful to do engagement, even though it’s time-consuming and intensive. Quite frankly, while it may feel good to divest from certain stocks—particularly in more developed public equity markets—it has very limited impact on altering the behavior of the underlying company.

That essentially was the output of this. The key findings have been put forward in our long-term stewardship policy, which, with the support of our treasurer Janet Cowell and our advisory board, were accepted. We’re currently working through and developing tools to help build out the implementation process within the investment due diligence that we do, including within our private equity exposure.

Snow: Sondra, I have a follow-up question. But first, I want to remind the audience that you can submit questions to our presenters. The questions are submitted anonymously. The other audience members will not see your question. We’ll pick the best ones and get to audience questions at the end, but you can start submitting them now. Sondra, my follow-up question is you mentioned engagement as being something that works, which is good to hear. Put that through the private equity lens. In the public markets, you maybe can agitate for change at the board level or if you’re proxy voting, but in private equity, there is a long-term and typically majority ownership model. Would you say that the engagement evidence is a very solid indicator that private equity can actually be a very strong tool for ESG?

Vitols: Potentially. One thing to consider from our perspective is the GP-LP relationship versus being an outright shareholder as a majority shareholder. In general, both for public equity and private equity and looking at the evidence, good governance leads to better performance both for publicly-owned companies as well as the companies held in the portfolio of private equity mangers. So, that’s a common similarity.

But I think the degree of influence and engagement and the approach that’s taken will be somewhat different if you are a majority shareholder versus an LP. Again, part of what you need to think through is [that] a lot of these issues, whether or not they’re material, are very industry-dependent. So, again, you need to apply this materiality lens in looking at what portfolio companies are held by a private equity manager? This can be more complicated than dealing directly with a public company in an industry group because you’ll have to get more granular in thinking about what is material to the co-mingled fund or in the fund held by the PE manager or the GP versus dealing with a public company.

So, on a high level, the answer is yes. But, as we’ve discovered in looking at ESG issues, it tends to get very granular very fast if you are using the lens of materiality as your guide, which I think is a prudent one for long-term investors given the long-term liabilities we have and the challenging investment environment we’re facing globally going forward.

Snow: Melissa, what would you say would be the most important aspects of the findings if you put them through the private equity lens?

Waller: I would have to weigh in similarly, just from more of a holistic perspective than Sondra noted. Something my mantra has been all along has been around the good governance leading to better performance. And, for us, integrating within the due-diligence process for all our asset classes, including those pieces of private equity, but just that the global risk management and having that in mind of the awareness of material long-term economic, environmental, geopolitical, societal and technical pieces that risk could have come in those process. And companies that are aligning themselves with that oversight and where they put a prominence there is going to benefit us as investors within all of those asset classes generally. So, for us, that was something we were looking for validation around from a corporate governance standpoint.

Then, from the investment philosophically, looking at the policy pieces, it was very promising to see that they wanted to align with that within this bridge policy to make sure we had all of those factors looked at and considered as they’re looking at these long-term pieces that are so important to the portfolio overall.

Snow: We’ve got some good questions coming in, so why don’t we answer a few questions from the audience? Here’s one: “For public equity, there are third-party tools like those provided by MSCI, Sustainalytics. And for real assets, there’s GRESB. Have you found any such tools for private equity? What kind of tools exist, if any?”

Vitols: I think the person asking this question has made a good observation. Generally, most of the ESG information you can get through the vendors mentioned, as well as Bloomberg, focuses on the data that is self-reported by publicly-held companies. That said, one non-profit group we have found very helpful in filtering the data and applying it towards privately-held companies is SASB—the Sustainability Accounting and Standards Board.

They have gone through a very extensive and rigorous exercise using investor participation, equity analyst participation and regulators—essentially, a very good sampling of the folks that are interested in this space—to help identify which issues are material across different industry sectors in a very granular way. That materiality mapping really is agnostic as to whether the company is publicly or privately held, so I would encourage the questioner to refer to the SASB site and the materiality map. That is the basis of the tools we are developing to help build out what we do in the due diligence for our private market managers.

Snow: Of course, there will be an SASB conference in New York on December 1, one day after the Privcap Private Equity ESG summit (if you think you should be invited, please contact me). So, that’s a very good observation; thank you for that, Sondra. Here’s another question from someone in our audience: “I’m curious as to where pushback may have come from and what it focused on.” Without naming names, Sondra or Melissa, did you encounter pushback?

Waller: Yeah, I could start from the overall perspective. We anticipated that there would be cultural change-management pieces we would have to incorporate into the process overall. Sondra brought that to our attention early on in the process in the way she went about suggesting the research phase. For us, that is why we built in such a long period of due diligence over the 18 months. We actually created a non-threatening environment where we did an educational series for our investment staff. So, as far as internal pushback, we wanted to offset that with the educational pieces and level-setting—getting everyone to open the dialogue and to collaborate similar to what the purpose of this webinar is to create that dialogue and to educate experiences and where we’ve seen best practices or worse practices and to hear from the industry folks and where they’ve been on that journey as well as our peer groups around the world.

So, for us, the internal piece—the corporate governance committee was armed with one set of information and viewpoint and perspective. The investment staff came from several different places within wherever they managed the assets. Obviously, our public equities team was a bit more on board from the get-go because that’s something they had been living and breathing and in conjunction with the corporate governance team. But, with Sondra’s plan around the educational series and the level-setting, the internal pushback—we did some surveys and participatory feedback along the way, which was very helpful to be transparent with one another and where we stood. But I think that was overcome.

I’ll talk a bit about the external interactions and let Sondra opine on the things she found because she was working very intimately with the internal team as well as the external interviews. Externally, we did have a bit of hesitation sometimes in getting the information, even from our peer groups who we may have great working relationships with. I think there’s a sensitivity around the data-sharing in some of these spaces that are not as developed. We were able to overcome that by creating a way for them to be participants as well in our education series. So, we opened up some of the forums for these peer groups to listen in and to share information. We also created a couple of channels in the educational series to bring peers into the office to present some of their experience. So, I think you head off some of the pushback externally by bringing them into the process and making them part of the process.

Then, that sharing goes a bit better as far as information flow. Obviously, we still had some areas where we may not have been able to obtain some of the research pieces. Sondra can elaborate a bit more on that. But overall, we had an excellent experience in just having this conversation with several groups to create the pieces we wanted to put into place. Sondra, I don’t know what you want to add to those.

Vitols: I would say within the investment-staff piece, one of the things we had to deal with early on is the recurrent perception that looking at sustainable investing comes at the expense of sacrificing market returns. I think that’s the legacy of the early SRI funds. In particular, I would say some of the early movers that focused on doing clean tech-themed private equity-type investments—those have consistently underperformed.

Again, I think part of it was, in a very left-brained way, looking at that issue. Thinking through that piece with the materiality lens was helpful. I think that’s a common concern that comes up among investment staff: if we go there, we’re basically going to be sacrificing returns for our portfolio. Exploring that with facts and then looking at areas where—looking at it through the materiality lens makes a difference because, frankly, part of the reason we opted to go through integration versus direct capital allocation is it is very challenging to find institutional-quality ESG investments within private markets in particular.

So, this is a way of augmenting the good due-diligence processes we have in place while ensuring that we’re able to meet our targeted, long-term returns. I would say the second piece is that—and this was borne out by the benchmarking studies—for certain issues, climate change in particular, it can get very polarized and divisive depending on the groups involved. I think it’s important to have a discussion around issues that expand beyond that to show. For example, people were like, “Governance, is that really part of this space?” Yes, it’s a big part of it and it accounts for a good part of how companies perform.

That’s a way of having a more rational investment-focused dialogue that doesn’t get polarized quite as quickly and having those discussions and evidence in an open framework where it was coming bottoms up. It wasn’t like, “OK, we have to go do this,” and people are reluctantly doing this. Again, as Melissa eluded to, addressing some of these issues that come up early from an investment perspective, looking at them through a fact-based and materiality lens and having the investment staff be part of that from the get-go is important. I’m an investment person and I have seen a lot of sub-optimal products that are simply being pitched because they’re green or have that ESG theme attached to them. If you see enough of that, you don’t realize that that’s not the entire picture. So, we took care to work through that and think about where real opportunities were.

Waller: Sondra, I think another thing that really helped was we kept going back to what was at the core of the overall investment goals and mission. I think Sondra and our CIO kept a really good handle on looking at those principles first and foremost as we drove to work through the process. Then, to echo Sondra’s statements around some of the external validator pieces, the other piece I would add was that groups like PRI and looking at the stewardship principles of folks that have done great work in looking at where the commonalities are across some of those areas. Really taking all of those things into consideration helped us have a grounding for where we wanted to emulate best practices in some of those pieces and keeping it at a level that aligned with our investment processes that we were trying to achieve.

For keeping some of those core things in our mind and in the process, Sondra always did a really good job of laying that landscape, which I think was helpful for the teams overall.

Snow: Great. Let’s move to another question that came in here: “How do you think you will allocate your resources between more due diligence versus more engagement in the ownership phase?” I guess [they’re asking about] really kicking the tires on the GP to see if they have a suitable ESG capability versus hovering over them as they attempt long-term value creation at a portfolio level.

Vitols: I think those are organically embedded in, quite frankly, the performance targets we are looking for within our PE managers. And there are two pieces to it. One is looking at the deals and the track record for the PE manager and understanding at a very granular level what goes into the valuations for the companies and the potential co-investment deals coming forward and whether there are issues that are material risks around those valuation assumptions.

Second, a lot of what you see already is a governance issue but it’s how we as LPs align our interests with our GPs long-term. At the outset, identify where there potentially may be conflicts of interest and have—through negotiations—very set ways of addressing that when they come up. I’ve sat on a couple of the LP advisory committees, but thinking about that ahead of time, particularly around governance issues. Then, depending on the industry makeup of the area that the manager is doing company acquisition, how that plays out ultimately in the valuation reflections is important. Maybe that’s too high-level, but it’s really just building out what we do already on a deeper, more granular level and thinking about it both in terms of the companies that are being acquired and then sold by the GP. Then, looking how to maintain our interests as an LP aligned with the GP mainly around governance issues throughout that longer-term time horizon.

Waller: David, from a corporate governance standpoint, it really helps us to frame the G portion of corporate governance in our strategy there and where we engage with companies. Because folks who work on that side of the house know how time-consuming that is as well. For us, this gives us a clear path to some of those engagement pieces.

Snow: Here’s a question that’s a good one: “How often do you review the ESG risks in an investment that’s already been done?” Keeping in mind that private equity deals are typically held for anywhere from three to 10 years, are you or do you plan to regularly assess the risk in that deal? Or is that something you see as baked in at the time of the investment?

Vitols: That’s a good question. I would venture to say most of it is baked in at the onset of our investment period. But it’s similar to… if, say, you’d signed on with a manager that essentially is focused on certain areas of U.S. middle markets. And, in the middle of that, all of a sudden, the deal flow changes—and I’m completely making this up—to a radically new, different area. Pick your favorite emerging market. That would be cause for concern.

I think most of the risk assessment will be in keeping with what we do earlier, which is in the due-diligence phase. Then, there’s monitoring and review of performance. But that will not radically change going forward.

Snow: Here’s a question—maybe we can throw this one to Melissa—that requires you to look into a crystal ball. It says, “What do you find that institutional investors expect from their private equity GPs as it relates to ESG? How do you think those expectations will change over the next five to 10 years? You must spend a lot of time with your institutional investor peers, and is there a growing momentum toward expecting more from investment managers?”

Waller: I love the crystal-ball questions. Yes. I think that this is very timely and—in the last couple of panels that I’ve spoken on, we’ve actually had a trend in all of us who are working with folks and our teams and trying to have better communication between the two groups. Because it’s in everyone’s best interest to be on the same page and to be getting the information that we need as investors to do our jobs. But also for those folks who are trying to decipher what we need to understand what we need to be successful and where we have that.

In some of these working groups that I’m seeing coming out of a lot of these discussions, this was something we learned some best practices in when we went to Europe to talk to some groups that had good stewardship principles in place and good open dialogues across with the firms—having discussions openly around the due-diligence processes or some of our checklist items or the things that we have as expectations that we’re going to try to work into our processes. And I don’t want to say [using] a cheat sheet or user guide, but just having a conversation with them around this.

When I was speaking with Natasha just a few weeks back, they actually have established some great sample-interaction checklists and things to open up that conversation specifically around private equity. Natasha, I don’t know if you want to speak to any of that, but I found it very helpful when I brought that back to my team to say, “Maybe we need to be having these conversations where people are understanding what we need in order to make those decisions or to have governance over some of those pieces and to really understand what we need and what we are asking for.” Because it’s new for all the players on every side. That’s a space where we can be helpful in setting some of those conversation standards.

Again, there’s a natural, organic tension there. And to use that to both sides’ ability to create the best practices or the best processes that you can. Sondra, you all have been talking specifically as a team of what some of those expectations would be. I don’t know if you want to add to that.

Vitols: Yeah, and… institutional investors are quite different, even though they all may be LPs for a given private equity firm. But there are two areas coming up where I think there’s going to be sustained long-term LP interest and pressure. One is what Melissa has been talking about, which is more transparency about getting information, particularly around portfolio management companies. You can apply an ESG lens to that.

More specifically, understanding and getting more detail around the fee structures GPs have and how that relates to the net IRR return over longer time periods is important to us, to see if we ultimately are compensated for that illiquidity premium embedded in this strategy. I think that ties in very well with this issue of getting better reporting. Then, thinking through and guiding our GPs on establishing which are the specific ESG issues that matter to us and making sure we get information around that.

Again, I think the other recurrent theme in this group is conflict of interest resolution between GPs and LPs, which sits very squarely in the governance wheelhouse of ESG. That’s something North Carolina has been engaged in for a long time. I and my colleagues who work in private markets do this on a regular basis and I think that is a continuing trend.

Snow: I’m going to ask a final question. I apologize to our audience. We got a ton of very good questions and, of course, we only have a limited time. But maybe we can close with this one (and there were a few questions related to this)—it has to do with third-party consultants and resources in helping institutional investors establish their ESG programs. Do you see any trends right now with regard to that? Are there some quality third-party experts that can help North Carolina? Or do you see a trend for institutional investors to bring this expertise and these screening and monitoring capabilities in-house?

Waller: One leading overall, overarching comment that I find in the investor community is that several groups are very under-resourced in being able to have expertise in-house around those things, so it’s a very important area. I know Sondra and her team have spent a lot of time doing due diligence where we would get the best pieces from that. Sondra, I’ll let you add to that.

Vitols: Yeah. We actually surveyed what consultants are doing in this space. Again, there’s a lot of dispersion about the level of involvement and the depth, depending on who you’re looking at. And I think it’s important to distinguish between groups that work as investment management-type consultants versus groups that are engaged in the ESG space on behalf of other stakeholders.

To Melissa’s point, one actively growing area that I think is particularly productive is from a corporate governance viewpoint—outsourcing and augmenting that activity through groups that have the skillsets and are able to engage a public company over a longer time period. Because one of our observations is [that] if you are getting engaged with a public company on a particular issue—say, board diversity or independence—that’s going to be a long conversation.

Particularly with public pension plans, you may not have the staff to do that, so we are seeing a trend in outsourcing activist corporate engagement. But, from the investment standpoint, a lot of different groups are involved in this space and, again, it’s important for investors to assess what they bring in ESG and their level of experience in doing this for institutional investors.

Snow: Thank you to everyone. Unfortunately, this is a great big, important topic but we promised to keep this conversation to 45 minutes. So, we’re going to wrap it up, but as a reminder to our audience, this webinar will be available in playback mode following the end of this live segment. We are also going to be transcribing the conversation and turning it into a report that will be available at in the coming weeks. Finally, for those institutional investors who have an interest in attending the November 30 private equity ESG summit in New York, please contact the Privcap team and we will look at getting you an invitation.

Of course, a huge thank you for our three experts for presenting their views today: Melissa, Sondra and Natasha. I’m now going to sign off. Thank you very much to everyone for joining a Privcap webinar.

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