09 Mar 2021

Responsible Investment Policy Framework

A framework to both design an approach to RI and document it in a clear and detailed policy.

Responsible Investment (“RI”) is an area of interest for asset managers, investors, and increasingly regulators. There is now a growing expectation amongst institutional investors that asset managers develop an RI Approach and disclose this approach via an RI Policy.

Historically RI was associated with value or norms-based security exclusions, but as awareness around RI issues grows globally, investors now have different motives for considering RI in the investment process including the financial materiality of RI-related risks. This has led to spectrum of approaches to RI.

This memo contains discussion on the following areas of building and documenting an RI Approach:

  • Foundations of an RI Approach: Key considerations including the key drivers, the spectrum of approaches, resource requirements, data, and the impact of RI on products.
  • Building Blocks of an RI Approach, including:
    • Responsible Integration
    • Responsible Asset Selection: Exclusions, Inclusions, and Impact
    • Responsible Ownership: Voting, Engagement, and Activism
    • Responsible Corporate and Market Citizenship: Organisational Initiatives, Good Market
    • Citizenship, and Carbon Offset and Hedging

Section 5 consolidates this into a framework for disclosures within an RI Policy.