2011 Selecting an investment manager

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<h3>When you have to ask about responsibleĀ investment</h3>
<strong>RUBY SANDHU of law firm AMSTERDAM &amp; PEROFF comments: If the charity believes in an environmental, social and governance (ESG) policy or responsible investment policy, one would envisage this to be a clearly defined commitment in its statement of investment policy, available for review on a regular basis by the board of trustees and the fund manager. On that basis one would expect certain criteria to be met by any fund manager in a selection process for a new investment mandate.</strong>

You really do need to make sure that the fund manager is aware of or, where appropriate, is actually a signatory of various internationals norms and/or standards, e.g. from the UN. You need to be clear about the fund manager’s investment philosophy and strategy and with respect to ESG. You need to know about the fund manager’s ability to incorporate ethical and ESG factors into an investment policy. Question the relevant expertise in this area.

You need to be comfortable about the fund manager’s transparency and openness in relation to making such investments, the process and internal system checks to ensure compliance with an ESG policy. You should know what is the fund manager’s definition of perceived/potential risks with respect to such investments and the quantitative approach taken to risk around ethical screening and ESG. You should ask what is the fund manager’s methodology and regularity for reporting, and the provision for adequate monitoring systems to ensure implementation of the responsible investment policy.

Then there is the importance of the general relationship and openness in communication between the trustees and the fund manager, with respect to ensuring that the defined mission objectives and responsible investment policy are constantly under review so as to ensure implementation. Generally ascertain the ability and interest in collaborating with other entities and stakeholders to address economic social governance issues and challenges.