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Castle Hall Issues ESG Due Diligence White Paper for Investors, Highlighting ESG Lessons From 2020

Jan 13, 2021 11:39:18 AM

Castle Hall, the Due Diligence Company, today issued a new white paper outlining lessons from 2020 across the landscape of ESG investing. The stresses on health and equality created by Covid-19 were just one catalyst for unprecedented attention from investors to environmental, social and governance issues in the past year. As a result, effective ESG due diligence has become much more important at every stage in the institutional investment decision making process.

The paper highlights five core topics across the ESG landscape in 2020:

  1. A turning point for diversity and inclusion in asset management
  2. Asset manager behaviour and reputational due diligence
  3. Fighting greenwashing
  4. Convergence in sustainability reporting (rationalising the “alphabet soup”)
  5. Is ESG investing just about making more money – or does “on the ground” impact matter too?

A clear statement of the changing sentiments around ESG came from Carlos Joly, fellow of the Cambridge University Institute for Sustainability Leadership and chair of the expert group that drafted the United Nations Principles for Responsible Investing (the “UNPRI”). In a December 2020 interview with Investments and Pensions Europe magazine, Dr Joly noted “unless investors walk the walk, it’s pretty clear they’ve signed up to UNPRI only because the ESG halo helps gather more assets and make more money”. He added: “the UNPRI is right to get real and dismiss those who sign up under false pretences – good riddance to hypocrisy.”

Chris Addy, Castle Hall’s Chief Executive Officer, commented “there have been many changes in ESG due diligence since we first began our ESG work five years ago. We are seeing the next generation of ESG oversight from institutional asset owners, as ESG moves beyond manager self-reporting to more detailed diligence procedures.”

Castle Hall works with institutional investors to support their ESG due diligence programs, at the level of the investment decision making process (“RIS”, or Responsible Investment Strategy) and the management company itself (“RIM”, or Responsible Investment Manager). Castle Hall also completes Reputational Due Diligence (“RDD”) on asset management companies and related corporate executives, drawing on more than 30,000 legal and regulatory databases and global media sources.

“Castle Hall helps investors build a more meaningful picture of ESG practices when hiring external asset managers,” said Mr. Addy. “Is there actual evidence of inclusion of ESG factors when investment decisions are made – or is ESG just a greenwashed marketing veneer? And when hiring the management company, what is the firm’s status in terms of enhancing employee diversity and inclusion, how does the firm seek to improve its environmental performance, and are there any lawsuits related to workplace misbehaviour such as sexual harassment?”

Castle Hall’s white paper can be downloaded from esgdiligence.com, Castle Hall’s dedicated ESG website.

Topics:ESGAsset ManagementESGDiligenceGreenwashing

About Castle Hall Diligence

Castle Hall helps investors build comprehensive due diligence programs across hedge fund, private equity and long only portfolios More →

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