Establishing ESG committees and training needs

Responsible Investment and Ownership Tool-Step 3

Although individual Trustees may be assigned to take the lead on specific functions and tasks, or to act as “champions” for the overall strategy, the Board must take 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.

Content Finder - Step 3 - Establishing ESG Commitees and Training Needs

Establishing ESG committees and training needs

Although individual Trustees may be assigned to take the lead on specific functions and tasks, or to act as “champions” for the overall strategy, the Board must take collective responsibility for ensuring that the relevant roles and responsibilities have been assigned and that the right level of training and support is available.

In addition, it is important to establish a clear understanding of the role and specific duties of the Principal Officer in relation to the fund’s RI strategy. This is likely to vary from fund to fund, depending on governance structure, the composition of trustees and general capacity.

Ultimately, the way an organisation chooses to include ESG staff in its structure will depend on a range of factors including the organisation’s resources, business model, client base, existing responsible investment expertise and team structure.

Two common approaches are to have a standalone ESG team or to integrate ESG knowledge into an investment team – or a mix of both.

Collaboration between small groups of funds of a similar size or structure can prove invaluable at this stage. This may occur at institutional level, or at the personal level between trustees and principal officers. Trustees who sit on the boards of several funds may be in a good position to facilitate such synergy.

The Board should also consider the external expertise and support that are available to assist on RI matters. In addition to the fund’s investment consultants, such resources may include business schools, the PRI, and specialist RI advisory firms.

Training can take place at any time during the implementation process. It is important to identify the right level of training, relevant for the roles and responsibilities assigned.

A helpful starting point may also be the ESG topics section of this site to get an overview of the relevance of ESG topics and strategies and to help think through knowledge gaps and what additional training might be needed.

There is also lot of training and technical support available in the market, including:

  • Batseta – Various recognised CPD (Continuous Professional Development) programmes are available here.
  • ASISA Academy 
  • Principles for Responsible Investment – A range of online courses available via the PRI Academy
  • Southern African Impact Investment Network 
  • IFC – See ESRM Africa for updates on courses and online training programs available from IFC and its partners

The Teachers’ Retirement Board establishes beliefs, policies and priorities around integrating ESG considerations, such as climate change, and provides oversight of staff who are responsible for executing the board’s mission and strategies.

Through the direction and leadership of the CalSTRS chief investment officer, staff works collectively and collaboratively to manage climate change and other ESG risks.

CalSTRS has established several cross-asset class teams to implement the board’s goals around ESG, including goals related to climate change, risk management and opportunity capture. We believe a team-based approach allows for the sharing of experiences and best practices, and allows for each asset class to be directly responsible for ESG integration. These teams include:

CalSTRS Chief Investment Officer, Christopher J. Ailman, is a strong advocate of integrating ESG risks, such as climate change, into CalSTRS’ investment management processes. Ailman sets the example for staff by reinforcing that assessing ESG risks and opportunities related to climate change is a priority. Ailman leads regular ESG training and education for CalSTRS staff and publicly urges other financial market participants to recognize and manage climate-related risks.

CalSTRS Green Team. The CalSTRS Green Team is a cross-asset class committee with the goal of incorporating environmental, including climate-related, considerations into investment risk management and opportunity capture. Since its launch in 2007, the focus has pushed beyond carbon emissions to consider risks and opportunities related to issues such as land use, water sourcing, mineral extraction and waste disposal.

Sustainable Investments and Stewardship Strategies. The CalSTRS Sustainable Investments and Stewardship Strategies Unit is responsible for the majority of CalSTRS’ stewardship activities, including proxy voting and engagement, around ESG and climate change. SISS oversees a portfolio that invests in sustainability-focused opportunities and serves as an ESG and climate change knowledge center for our asset classes.

CalSTRS Committee on Responsible Investment. The Committee on Responsible Investment, led by CalSTRS’ chief investment officer and composed of staff representatives from each asset class, helps the CIO evaluate exposure to ESG-related risks and take appropriate actions to ensure that external and internal managers adhere to CalSTRS’ policy surrounding the management of ESG risk exposure.

CalSTRS Asset Classes. Each CalSTRS asset class takes ownership of conducting research and carrying out due diligence as it relates to the incorporation of climate-related risks. Additionally, each asset class works with the SISS Unit for additional climate-related risk integration.

Source:   CalSTRS Green Initiative Task Force Annual Report 2019

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setting targets and timelines

Part and parcel of the policy setting process should be determining what the ESG goals and objectives of the fund are and reflecting those in the policy itself. Ideally these should be set systematically and revised 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 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 (asset consultants and asset managers).

How to Select Service Providers to help implement Your Policy

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