LPs to adapt ESG guidelines

Limited partners intend to supplement their ESG-related due diligence with the UN PRI’s LP DDQ.

In a conversation with pfm, pension fund APG, which manages €428 billon of assets, said it intends to use the UN PRI’s Limited Partner Due Diligence Questionnaire (DDQ) alongside its own existing due diligence questionnaire.

“We have been asking ESG questions in our due diligence of private equity investments for a number of years and plan to also use the new LP DDQ for this purpose, adding more specific questions we deem necessary,” said Marta Jankovic, senior sustainability and governance specialist for the pension.

Despite the DDQ creating a better understanding around ESG questions, Susan Flynn, Partner at GP and secondaries investor Coller Capital also said that many LPs with a responsible investment framework for private equity already in place will still send GPs their own questionnaire. “A lot of LPs will still send in their own questionnaires, but the DDQ will provide them with the tools to help them shape the type of questions to ask.”

The LP DDQ was officially launched in November 2015, after being drawn up by a group of 41 LPs, fund of funds and GPs, including APG and Coller Capital.

The questionnaire was created to provide a standardised way for investors to evaluate fund managers’ on their commitment to ESG issues, and to act as a framework for GPs that up until this point, were unclear about the information that they should be providing about ESG.