Legal Considerations
in Responsible Investment
ICGN and GISD Partner with Grant & Eisenhofer ESG Institute to Standardize Legal ESG Draft Clauses for Updated Model Mandate
In 1995, the International Corporate Governance Network (ICGN) was assembled by influential investors to promote and advance corporate governance and investor stewardship standards. In 2012, ICGN published its first Model Mandate (Mandate) which provides draft contract clauses for use by asset owners and managers. In April 2019, the UN announced the formation of the Global Investors for Sustainability and Development Alliance (GISD), a group of 25-30 CEOs commissioned for the purpose of achieving the UN’s 17 sustainable development goals (SDGs) by expanding long-term investments for sustainable development.
Last year, ICGN and GISD decided to combine their expertise and jointly update the Mandate in order to reflect new guidance and developments regarding sustainable investing. Shortly thereafter, ICGN and GISD enlisted the help of the Grant & Eisenhofer ESG Institute to draft legal ESG clauses in the Mandate, for use by asset owners and managers. The Mandate, which provides robust guidance on how to incorporate the UN’s SDGs with investor stewardship, was formally launched on Wednesday, June 22, 2022.
The ESG Institute is humbled and honored to have had the opportunity to work alongside ICGN and GISD in crafting the Mandate’s draft legal clauses. The ESG Institute also recently partnered with Principles for Responsible Investment (PRI) to provide standardized legal ESG clauses for use in investment management agreements which are featured in PRI’s Investment Manager Appointment Guide.
The ESG Institute welcomes any future opportunities to share its legal skills and expertise in furthering the sustainable investing mission.
View the updated Model Mandate.
Background on the Grant & Eisenhofer ESG Institute
Global investor interest in sustainable and responsible investment continues to accelerate at a rapid pace. Responsible investment strategies take into consideration environmental, social and governance (ESG) factors in portfolio selection criteria and management, with the belief that better corporate ESG profiles result in fewer disasters or corporate scandals, and better long-term returns. As one example of investor enthusiasm for ESG funds, London-based ETFGI reported in December 2021 that assets invested in ESG ETFs and ETPs listed globally had reached a record $371 billion.* Responsible Investment currently represents approximately 36% of all professionally managed assets worldwide.** Investment policies that integrate ESG criteria tend to express investor values specific to weapons, carbon emissions, fossil fuel reserves, labor conditions, human rights, corporate governance, executive compensation, #metoo and other social and environmental issues. Corporate engagement and shareholder activism are additional approaches investors are increasingly using to influence corporate behavior in furtherance of ESG principles.
With a quarter century of actively protecting and promoting the rights of institutional investors and public entities, Grant & Eisenhofer has built a legacy in corporate governance with an unwavering commitment to responsible investment. The Firm has cemented this history with an initiative expressly designed to address the increasing dialogue on ESG within the institutional investor community – the Grant & Eisenhofer ESG Institute. The ESG Institute is a non-profit organization formed in 2017 with the mission of harnessing its members’ legal skills to work with investors to further a wide array of ESG goals. To this end, the Institute pursues select matters exclusively to promote legal issues related to ESG considerations, and offers thought leadership in the discipline. The Institute also aims to address, on an ongoing basis, the legal issues that decision-makers and stakeholders in the investment community grapple with in implementing responsible investment criteria.
Some of the legal issues the ESG Institute focuses on include:
- Sustainability and Fiduciary Duty
- Climate Change and Securities Law
- Corporate Legal Responsibility for Activity in Developing Countries
- Legal Challenges to Limit Compensation
The ESG Institute is led by G&E's Caitlin Moyna in the U.S. and Nadia Klein in the UK. It is also guided by an Advisory Board comprised of a diverse range of investors with global experience spanning asset managers, public pension funds and nonprofits, all of whom have a demonstrated track record of commitment to ESG causes. Prior to the pandemic, the ESG Institute met periodically, hosting regular events in both the U.S. and Europe to provide a continuous forum for engagement of like-minded participants and organizations. It will resume such events following the pandemic.
* Source: ETFGI Press Release – December 17, 2021
** Source: Global Sustainable Investment Review 2020 © Global Sustainable Investment Alliance 2021