ESG CHAPTER
“...UNTIL RECENTLY, ADOPTION OF ESG PRACTICES BY HEDGE FUND MANAGERS HAD BEEN MODEST. BUT, IN THE PAST SEVERAL MONTHS WE’VE SEEN GROWTH IN IMPACT-ORIENTED STRATEGIES OFFERED BY HEDGE FUND MANAGERS.”
PETE KELIUOTIS
EXECUTIVE VICE PRESIDENT AND HEAD OF ALTERNATIVES CONSULTING, CALLAN
T
here’s certainly more interest in ESG; we’ve seen that growth for years and, originally, it was more focused on the traditional side of the market. Now, ESG considerations affect all asset classes and client types. Callan has regularly worked with clients to help them identify managers whose investment practices are consistent with their ESG policies, whether that means having more of an exclusionary screening, or having more impact-oriented investment strategies. So, we’ve witnessed a growth of interest there. Within private equity we have seen widespread adoption of ESG factors as investment considerations for several years now, particularly by larger managers. And in real assets we’ve seen expanded investment in renewables and use of green building technology. However, until recently, adoption of ESG practices by
29
hedge fund managers had been modest. But, in the past several months we’ve seen growth in impact-oriented strategies offered by hedge fund managers. One example is activist investors targeting integrated oil companies to try to persuade them to pivot towards renewables. Some of our clients are interested in ESG integration at multiple levels: not just how these strategies are implemented at the portfolio company level, but also in understanding what a GP has done at the management company level. We have an ESG consulting practice led by Tom Shingler and comprised of senior consultants and research professionals across the firm that work with Callan clients to create and implement customised ESG policies and procedures, as appropriate for their goals and governance, and to develop a strategy to implement
these policies. Also, Callan is a PRI signatory, and we’ve instituted ESG practices within the organisation and as a result of our manager relationships. Finally, DEI (diversity, equity, and inclusion) is an area of increased emphasis by Callan, its clients and its managers. We have revamped our efforts to promote DEI within the organisation, train our employees, and step-up recruitment of diverse candidates in hiring. With respect to managers and strategies, we have expanded our data collection efforts to better measure changes and compare firms and have increased the inclusion of diverse firms in our manager searches.
HEDGE WEEK GLOBAL OUTLOOK REPORT I JANUARY 2022
