UN PRI Signatory

Fulcrum is committed to advancing the United Nations-supported Principles for Responsible Investment (PRI) by helping Private Equity clients integrate environmental, social, and governance (ESG) considerations throughout their investment process.

About the Principles for Responsible Investment (PRI)

The 6 Principles for Responsible Investment offer a menu of possible actions for incorporating ESG issues into investment practice, where consistent with fiduciary responsibilities. As a service provider, Fulcrum Consulting Group commits to providing, developing and promoting services that support a clients’ implementation of the PRI.

• Principle 1: We will incorporate ESG issues into investment analysis and decision-making processes.

  Possible actions:

  • Address ESG issues in investment policy statements.

  • Support development of ESG-related tools, metrics, and analyses.

  • Assess the capabilities of internal investment managers to incorporate ESG issues.

  • Assess the capabilities of external investment managers to incorporate ESG issues.

  • Ask investment service providers (such as financial analysts, consultants, brokers, research firms, or rating companies) to integrate ESG factors into evolving research and analysis.

  • Encourage academic and other research on this theme.

  • Advocate ESG training for investment professionals.

• Principle 2: We will be active owners and incorporate ESG issues into our ownership policies and practices.

  Possible actions:

  • Develop and disclose an active ownership policy consistent with the Principles.

  • Exercise voting rights or monitor compliance with voting policy (if outsourced).

  • Develop an engagement capability (either directly or through outsourcing).

  • Participate in the development of policy, regulation, and standard setting (such as promoting and protecting shareholder rights).

  • File shareholder resolutions consistent with long-term ESG considerations.

  • Engage with companies on ESG issues.

  • Participate in collaborative engagement initiatives.

  • Ask investment managers to undertake and report on ESG-related engagement.

• Principle 3: We will seek appropriate disclosure on ESG issues by the entities in which we invest.

  Possible actions:

  • Ask for standardised reporting on ESG issues (using tools such as the Global Reporting Initiative).

  • Ask for ESG issues to be integrated within annual financial reports.

  • Ask for information from companies regarding adoption of/adherence to relevant norms, standards, codes of conduct or international initiatives (such as the UN Global Compact).

  • Support shareholder initiatives and resolutions promoting ESG disclosure.

• Principle 4: We will promote acceptance and implementation of the Principles within the investment industry

  Possible actions:

  • Include Principles-related requirements in requests for proposals (RFPs).

  • Align investment mandates, monitoring procedures, performance indicators and incentive structures accordingly (for example, ensure investment management processes reflect long-term time horizons when appropriate).

  • Communicate ESG expectations to investment service providers.

  • Revisit relationships with service providers that fail to meet ESG expectations.

  • Support the development of tools for benchmarking ESG integration.

  • Support regulatory or policy developments that enable implementation of the Principles.

• Principle 5: We will work together to enhance our effectiveness in implementing the Principles.

  Possible actions:

  • Support/participate in networks and information platforms to share tools, pool resources, and make use of investor reporting as a source of learning.

  • Collectively address relevant emerging issues.

  • Develop or support appropriate collaborative initiatives.

• Principle 6: We will each report on our activities and progress towards implementing the Principles.

  Possible actions:

  • Disclose how ESG issues are integrated within investment practices.

  • Disclose active ownership activities (voting, engagement, and/or policy dialogue).

  • Disclose what is required from service providers in relation to the Principles.

  • Communicate with beneficiaries about ESG issues and the Principles.

  • Report on progress and/or achievements relating to the Principles using a comply-or-explain approach.

  • Seek to determine the impact of the Principles.

  • Make use of reporting to raise awareness among a broader group of stakeholders

ESG integration is naturally aligned to private equity through its long-term investment horizon and stewardship-based style.

“The PRI defines responsible investment as a strategy and practice to incorporate environmental, social and governance (ESG) factors in investment decisions and active ownership. With a strong emphasis on stewardship, and close contact between the GP and company management, private equity is naturally suited to responsible investment. A systematic and informed approach to identifying and managing ESG issues across the portfolio will protect, and can significantly enhance, investment value. Responsible investment is also a marker of the operational excellence of the fund itself, demonstrating transparent and strategic fund management.”

Source: UNPRI.org