ESG risk management principles
In practice, our analysis of ESG risks is focused around four areas of activity: screening, due diligence, engagement and collaboration.
Screening
We screen ideas on a variety of factors including market structure, experience of team and return potential; as well as assessing social, environmental, political and reputational risks. We reject investment ideas where there is poor governance and potential for detrimental environmental or social outcomes regardless of the sector. We are not passive investors and we do not simply buy markets or indices of companies. We carefully select investment groups who in turn carefully select the companies they invest in.
Due diligence
Before any investment is made we undertake a detailed due diligence process, during which we ensure an idea matches our expectations with regards to environmental, social and governance risks. We use the United Nations Global Compact’s principles focused on: human rights, labour practices, environment and anti-corruption, to guide our questioning to ensure that managers are building these areas into their own due diligence. If we are not happy with the outcome of the due diligence process, we will not invest in the idea.
Engagement
Our ongoing evaluation of the groups we invest in involves frequent contact and dialogue on a range of topics including social and environmental concerns. We prefer investment managers that have a concentrated number of holdings and engage with the management teams of underlying companies regularly. These groups focus on environmental and social issues as part of being a responsible business owner.
Collaboration
OU Endowment Management has forged a wide reaching professional network, which spans all levels of our team. All team members are encouraged to engage with peers to constantly evaluate our processes. We take best practice from a variety of frameworks, including the United Nations-supported Principles for Responsible Investment (PRI) and the United Nations Global Compact, and we will join organisations that we feel are appropriate to further enhance our processes. We are members of CDP (Carbon Disclosure Project), the Investor Forum and the Institutional Investors Group on Climate Change.
