Border to Coast Pensions Partnership, one of the UK’s public sector pension pools, is working with investment consultant Albourne on a new environmental, social and governance (ESG) framework for private markets.
In a statement today, the pool said it was concerned about the lack of robust and consistent ESG standards in private markets and that it was therefore supporting Albourne as it developed a framework based on due diligence questions (DDQ) recommended by the Principles for Responsible Investment (PRI).
Leeds-based Border to Coast has a private markets investment programme that it expected to grow to over £5bn (€5.8bn) in the next 12 months. Last year it appointed Albourne to provide a series of services to private market activities, such as investment and operational due diligence.
“While ESG reporting has improved in public markets, there is a clear need to enhance standards, transparency and how we measure ESG risk, opportunity and performance in private markets,” said Daniel Booth, CIO at Border to Coast.
“Albourne has a successful track record of implementing improvements on behalf of investors and we are delighted to work with them to enhance ESG reporting.”
According to the statement, Albourne has just launched a new questionnaire based on the PRI framework that replaces the ESG due diligence questionnaire from 2011.
The consultant has also developed a new ESG scoring framework that covers policy and governance, investment process and monitoring, and reporting.
Emlyn Palmer, head of ESG investing and partner at Albourne, said: “Today, the game changer is that investors are increasingly looking at ESG factors as investment risk factors. Incorporating an ESG scoring framework helps encourage managers to not only meet minimum acceptable standards, but to raise industry standards overall.”
He said the consultancy anticipated a “robust” adoption rate by managers, noting that eight months after launching a new diversity and inclusion questionnaire with the Alternative Investment Management Association, more than 2,000 funds had responded.
Border to Coast is owned by 11 local government pension schemes with combined assets totalling around £46bn. Since launching, the pool has secured £3bn of commitments across private equity, infrastructure and private credit, and deployed around £2.6bn to date.