The GISD Alliance and International Corporate Governance Network (ICGN) established a partnership to publish guidance on how to integrate SDG-alignment in the asset managers’ mandate. This entailed updating ICGN’s 2012 guidance that provided insight for asset owners on how to express their expectations to asset managers in contracts and mandates. Its particular focus was on the parts of the mandate relating to the investment approach, stewardship, ESG and the manager’s accountability to their clients. The updated guidance takes it a step further by using GISD’s Sustainable Development Investing (SDI) definition, according to which investments are required to create a positive contribution to the SDGs that is not outweighed by its own negative impacts.
The Model Mandate relies on three guiding principles: (i) Alignment – which includes, for example, incorporating investment principles, portfolio design and turnover and integration of sustainability and other long-term factors; (ii) Stewardship – which includes, for example, the engagement with investee companies with the aim of preserving or enhancing value on behalf of beneficiaries or clients; and (iii) Accountability - which includes, for example, the manager’s own governance arrangements, how conflicts of interest are managed, and the information to be provided by the manager to the client for monitoring purposes.