In 2005, the UN invited a group of the world’s largest institutional investors to participate in a process to develop principles to make real, tangible progress towards sustainable markets. The Principles for Responsible Investment (PRI) was established, which today is recognized internationally as the world’s leading proponent of responsible investment, with a global signatory base representing the majority of the world’s professionally managed investments. The Principles offer a menu of six possible actions to incorporate ESG objectives into investment practice. In adopting them, signatories contribute to developing a more sustainable global financial system that ultimately contributes to a more prosperous world.
The PRI further has developed a series of resources for asset owners, including guides on responsible investment and investment manager selection, appointment and monitoring. With the belief that ESG should be at the core of the asset owner-investment manager relationship, and recognizing that certain legal aspects are becoming standard features of such relationships as asset owners increasingly include ESG considerations in their IMAs and other legal documentation, PRI enlisted G&E to develop comprehensive standardized legal ESG clauses for inclusion in investment management agreements (IMAs). The suggested clauses are featured in PRI’s Investment Manager Appointment Guide.
These clauses, applicable to both listed equity and publicly-traded fixed income, are intended to empower asset owners in their selection, appointment and monitoring of their managers, and to be considered by asset owners and investment managers alike when negotiating IMAs. Industry-wide agreement on standardized terms in IMAs further facilitates the conversation for both sides and helps to manage expectations. Perhaps most importantly, the clauses are sure to help asset owners raise the bar on responsible investment. Having been at the forefront of ESG-driven litigation for years, G&E is proud and honored to have worked with PRI on an initiative of such central importance to the industry.