Guidance to help asset owners and managers to invest sustainably, closely aligning portfolios with the SDGs
The International Corporate Governance Network (ICGN) and the Global Investors for Sustainable Development (GISD) Alliance today launched a new Model Mandate to provide asset owners with guidance that facilitates the alignment of their portfolios with long-term investment in sustainable development – and more specifically with the Sustainable Development Goals (SDGs).
“There is an increased public and political expectation that investors should contribute to long-term sustainable value creation,” said ICGN CEO Kerrie Waring. “The Model Mandate is a practical tool to help exercise active stewardship of the assets for which they are responsible. We encourage asset owners and managers as well as standard and regulatory-setting agencies to commit to using and promoting the Model Mandate guidance.”
The Model Mandate was first published by ICGN in 2012. It provided asset owners with a series of example contractual terms around alignment of investment risk and opportunities, internal governance, incentives and performance, portfolio turnover, and reporting to clients to align the interests of their fund managers with their own obligations to beneficiaries.
In partnership with the GISD Alliance, ICGN has updated the Model Mandate to incorporate stewardship and sustainability-related responsibilities more clearly. This includes a series of draft contract clauses for Sustainable Development Investment, which aim to ensure that any positive contributions to the SDGs are not outweighed by potential negative impacts associated with the investment.
New priorities in the Model Mandate include:
- Reducing greenhouse gas emissions to achieve net-zero targets by 2050
- Recognising the impact of biodiversity loss to the health of the planet
- Identifying potential human rights abuses across subsidiaries and supply chains
“Achieving long-term sustainable value creation requires concerted effort by institutional investors to make long-termism and the SDGs a cornerstone of their investments,” said Navid Hanif, Assistant Secretary-General (designate) for Economic Development. “The Model Mandate provides valuable guidance to asset owners and managers that should support efforts to channel finance and investment towards sustainable development.”
Development of the Model Mandate was supported by several organizations from the United Nations system, including the UN-supported Principles for Responsible Investment (PRI), an independent network of investors working to incorporate environmental, social, and governance (ESG) issues into investment practice.
David Atkin, CEO of the PRI, commented, “The PRI welcomes the updated Model Mandate, which will help asset owners integrate ESG factors into the core of the relationship with investment managers – something that has been central to PRI’s work. Investment mandates are a bedrock of this relationship and incorporating ESG into this foundation is an important step for ambitious asset owners to develop a rigorous responsible investment policy. We particularly welcome the draft clauses which owners - and their advisers - can use to strengthen mandates to ensure responsible investment ambitions are delivered.”
Watch the launch event here.
Find out more about the Model Mandate on ICGN's website here.