Within the annual Responsible Investment Report for PSP Investments, the C$230.5 billion ($172 billion; €165 billion) Canadian pension fund spells out “notable ESG practices that we believe will become commonplace in the future”. It is a useful benchmarking guide for GPs who want to stay ahead of the sustainability curve:
- Increased focus on post-investment activities, including ESG integration in value-creation plans and training of board nominees on ESG topics.
- Greater attention to monitoring greenhouse gas emissions and target-setting at the portfolio company level.
- Monitoring of ESG key performance indicators that are material to portfolio companies and increased use of tools that enable ESG data to be collected alongside financial metrics.
- Enhanced asset-level ESG reporting, including ESG metrics aligned with the EDCI.
- Advanced diversity and inclusion initiatives at both the firm and portfolio company levels.
- Increased focus on climate change-related risks and opportunities to guide investment decisions.
- Greater focus on social factors such as employee health and safety, labour practices, and diversity and inclusion.
- Alignment of lenders and private equity sponsors to support material and consistent ESG data disclosure within credit markets.
- More robust ESG integration practices for private credit strategies.
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