The situation: A large, global asset manager sought to develop and implement a Responsible Investment (RI) approach firmwide. Previously the firm had implemented ESG tools into its investment analysis on an ad-hoc basis, based on client request. The firm’s ultimate goal was to become a United Nations Principles of Responsible Investment (PRI) signatory, but it didn’t have an existing, formalized infrastructure or reporting framework to do so. The lack of an integrated, formalized approach could have affected the firm’s ability to retain existing and attract new clients, jeopardizing its credibility and creating additional risks as a fiduciary.
The challenge: How and where should the firm begin to create a global RI infrastructure? What resources would the firm need to implement RI for the long term? With several separate entities managing various asset classes, where should the firm first devote its energies? How should the firm implement and communicate RI internally to create a culture shift? How would the firm measure success (defined as superior, long-term, risk-adjusted returns), over what timeframe, and in which categories? What appetite and resources did the firm have for advancement of ESG initiatives on a broader scale? Would the firm “screen out” companies, indices and/or sectors?
The result: This was a major initiative which required delicacy in balancing client needs with cultural appetite. RI was relatively new to the organization, which traditionally operated in silos. To achieve success, leadership committee and working groups were hand-selected to generate quick buy-in and momentum, and to force cross-functional collaboration. CGIR approached this systematically and strategically, participating in nearly every aspect from kick-off through implementation. CGIR worked hand-in-hand with team leaders to provide thought leadership as they: created ESG-related offerings; identified performance metrics, third-party data aggregators; evaluated risks associated with each approach and/or project; established budgets; and tracked and reported formalized processes. CGIR also drafted policy statements and other communications materials. Ultimately, the teams created a strong foundation from which to grow an RI platform, providing this global asset manager with a competitive advantage over those with a less rigorous approach.
