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In brief: KWAP’s ESG check list

A $34bn Malaysian pension lays out its approach to ESG due diligence.

Malaysia is home to some $400 billion of LP capital “flying quietly” into PE, as affiliate title Private Equity International reported back in May (registration or subscription required).

These institutions aren’t typically known for their prolixity, so we were particularly interested to hear Rizal Mohamed Ali, a vice-president for responsible investment at Kumpulan Wang Persaraan, telling delegates of PEI‘s Responsible Investment Forum: APAC Investor Day this morning what the 141 billion ringgit ($34 billion; €29 billion) pension looks for in potential GPs.

What do you need to know?

  • KWAP’s pre-investment review involves looking at whether GPs have a formal commitment or mission statement in place; whether they adhere to any international standard initiatives, such as UN PRI; and whether they make any commitment to ESG in their fund documents or side letters.
  • It also considers whether firms have qualified and adequate resources to implement ESG, such as dedicated staff.
  • The pension expects GPs to identify material ESG factors and risks in their own pre-investment processes, and to engage their portfolio companies on ESG.
  • It wants firms to disclose their ESG methodology via quarterly and annual reporting.