New York, May 16, 2022 (GLOBE NEWSWIRE) — The Pension Fund Coalition for Inclusive Capitalism, an initiative of the Coalition for Inclusive Capitalism and the Ira M. Millstein Center for Global Markets and Corporate Ownership at Columbia Law School, released today an open resource to help pension funds structure contractual language by establishing minimum environmental, social and governance (ESG) impact guidelines in investment agreements with asset managers.

The Pension Fund Coalition for Inclusive Capitalism has developed a model ESG impact contract language for use in asset ownership agreements signed with asset managers, encompassing a range of approaches to pension fund investments in public and private equity markets. The resource is intended to protect against the superficial implementation of impact-focused standards and to enable asset owners to better direct and monitor their asset managers to ensure they are investing in line with their priorities.

“For capitalism to be inclusive and sustainable, capital must be invested both to deliver returns to shareholders and to demonstrate its positive impact on people and the planet,” said Lynn Forester de Rothschild, Founder and Chairman of the Coalition for Inclusive Capitalism and Founding and Managing Partner at Inclusive Capital Partners. “The most powerful lever for investment change is with asset owners demanding that managers demonstrate both stock price returns and concrete evidence of overall impact.”

The Pension Fund Coalition for Inclusive Capitalism, co-chaired by Therese Whitmarsh and Hiro Mizuno, worked with public pension fund managers and legal advisers to provide pension funds and other asset owners with a guide to structuring ESG impact provisions in investment agreements. The tools include template mandates, reporting requirements and sample ESG impact criteria, which pension funds can use as a reference when negotiating ESG impact provisions in the context of relationships with fund managers. ‘assets.

“Most public pension funds have little control over how – or whether – their assets are invested with ESG impact guidelines. The model language fills this gap by ensuring standards of long-term value creation are met,” said Hiro MizunoUnited Nations Special Envoy for Innovative Finance and Sustainable Investments and former Chief Investment Officer of the Japan Government Pension Investment Fund, the largest pension fund in the world.

The model language is designed to be easy to use and can be tailored to the ESG and long-term investment priorities of asset owners. Flexible across a range of scenarios, approaches and public or private markets, it provides portfolio and legal teams with pragmatic ESG tools to:

  • Mandate models
  • Right to vote
  • Reporting requirements
  • Examples of ESG factors and criteria

The resource also includes guidance for fund managers and legal teams on other key considerations in determining ESG objectives within their broader investment agreements.

“As asset owners, those who oversee pension plans are clearly focused on the long term. For the benefit of beneficiaries and future retirees, pension fund trustees are looking for better ways to approach the integration of social and environmental factors as part of successful sustainability,” said Therese Whitmarsh, co-chair of the Millstein Center, chairman of FCLTGlobal and former executive director of the Washington State Investment Board. “With these tools, pension funds will have more ways to ensure that their capital is deployed by asset managers in strategies that align with a preferred approach to sustainability and ESG integration.”

On May 18 at 12 p.m. EDT, the Coalition for Inclusive Capitalism will co-host a virtual event with CFA Society New York and CFA Society Seattle to discuss the work of the Pension Fund Coalition for Inclusive Capitalism. Speakers will include pension fund managers and thought leaders, including the founder of the Coalition for Inclusive Capitalism Lynn Forester de Rothschild and the co-chairs of the Pension Fund Coalition for Inclusive Capitalism Therese Whitmarsh and Hiro Mizuno. Sign up to join here.

Pension fund managers familiar with the work added the following:

“It’s important for large asset owners, including pension funds, treasurers and endowments, to know how to structure an optimal relationship with their investment managers,” the state treasurer said. Illinois, Michael Frerichs. “Asset owners have a vested interest in ensuring their managers use best practices that add value and meet their needs. This includes incorporating ESG factors into investment decisions, adopting strong proxy voting practices, and providing robust reporting on investment management and stewardship activities. The model language released today will help investors structure strong relationships with their managers and help create consistent standards across the market.

“Pension plan investors and asset managers must create long-term value for clients and beneficiaries by considering social and environmental outcomes,” said Gordon J. Fyfe, Managing Director/Chief Investment Officer at British Columbia Investment Management Corporation (BCI). “Standard tools such as model mandates can support portfolio managers’ approach to consistently applying ESG principles.”

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Onthe Coalition for Inclusive Capitalism

The Coalition for Inclusive Capitalism is a global non-profit organization dedicated to making capitalism work for everyone. The Coalition partners with leaders from the private, public and civic sectors on initiatives to make capitalism inclusive and its benefits more widely shared. To learn more, visit coalitionforinclusivecapitalism.com.

About the Ira M. Millstein Center for Global Markets and Business Ownership

Building on Columbia Law School’s longstanding strength in corporate and securities law, the Millstein Center is at the forefront of new thinking about how corporations are governed. The center engages with business leaders and administrators to create meaningful dialogue on the challenges facing business, and serves as a focal point for the most innovative research on the policy solutions needed to address these challenges. For more information, visit millstein.law.columbia.edu.