Tool index

seven steps to guide your policy development and management process

Responsible Investment and Ownership Tool-Step 7

This tool takes you through the practical steps on how to integrate ESG into your investment policy statement, investment decisions and reporting.

Each section starts with a brief overview of what the step entails, followed by checklists, samples and case studies to get started.

Users can go straight to any step where guidance is needed, however for an overall effective ESG integration, the process should be considered in its entirety as the steps are interdependent and closely interlinked.

Step 1     >>

Developing a policy

This section describes the steps towards developing the ESG integrated Investment Policy Statement and includes samples, checklists and templates to help getting started.

How to develop a comprehensive ESG-integrated Investment Policy Statement

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Step 2     >>

setting targets and timelines

Part and parcel of the policy setting process should be to determine the ESG goals and objectives. The goals should be set systematically and reviewed on a regular basis. This section contains an indicative 3-year action plan with recommended progress milestones relevant to the South African context.

Guidance on setting measureable and achievable targets and timelines

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Step 3     >>

Establishing ESG committees and training needs.

The Board has collective responsibility for ensuring that the relevant roles and responsibilities have been assigned and that the right level of training and support is available. This section provides examples of how ESG committees and functions can be organised and an overview of training and support available for Trustees.

How to establish committees and capacity to support your Policy

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Step 4     >>

Selecting Service Providers

After revising the Investment Policy Statement (or Policies if several separate) to cover ESG, Active Ownership and Conflicts of Interest, a next priority for the Board of Trustees, is to ensure that this is executed by its Service Providers. This section provides an overview of the selection process and checklists of questions to ask service providers.

How to Select Service Providers to help implement Your Policy

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The monitoring phase is crucial to assess the actual delivery of the terms and conditions on which the manager was appointed, which in turn was informed by the ESG integrated IPS. This section provides an overview of how the pension fund can review and monitor asset managers’ ongoing integration practices.

Monitoring the effectiveness of implementation of the IPS

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Step 6     >>

disclosure and reporting

The FSCA Guidance Notice requests pension funds to report at least annually on how it has adopted ESG integration in its investment process. Pension funds are encouraged to adopt Sustainable Reporting practices in its Annual Reporting. This section provides guidance on how to do that.

Guidance relating to necessary disclosures and how to report

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Step 7     >>

Review Process

The Board should review the Policy and progress against the action plan and targets at least on an annual basis.

Guidance regarding an effective review process

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ESG  TOPICS     >>