The Principles for Responsible Investment Initiative has launched the Limited Partners’ Responsible Investment Due Diligence Questionnaire to encourage standardized due diligence on environmental, social and governance considerations in private equity.
The LP Responsible Investment DDQ was developed in consultation with a working group composed of 41 LPs, funds of funds and GPs.
There are 21 questions proposed to standardize the diligence framework in four categories:
- WHAT ARE YOUR ESG-RELATED POLICIES AND HOW DO ESG FACTORS INFLUENCE YOUR INVESTMENT BELIEFS?
- HOW DO YOU IDENTIFY AND MANAGE MATERIAL ESG-RELATED RISKS AND USE ESG FACTORS TO CREATE VALUE?
- HOW DO YOU CONTRIBUTE TO PORTFOLIO COMPANIES’ MANAGEMENT OF ESG-RELATED RISKS AND OPPORTUNITIES?
- HOW CAN LPS MONITOR AND, WHERE NECESSARY, ENSURE THAT THE FUND IS OPERATING CONSISTENTLY WITH AGREED-UPON ESG-RELATED POLICIES AND PRACTICES, INCLUDING DISCLOSURE OF ESG-RELATED INCIDENTS?
The LP Responsible Investment DDQ is accompanied by a guidance document.
Expect to start see these question on your investor DDQs.
Sources:
- Limited Partners’ Responsible Investment Due Diligence Questionnaire
- PRI launches private equity due diligence questionnaire
- PRI finalizes ESG questionnaire by Katherine Bucaccio in Private Funds Management