Institutional investors

There increasingly exists regulatory, stakeholder and public pressure to act as a responsible asset owner. The value-add of ESG is increasingly being recognised by institutional investors.

Institutional investors are seeking the means to play their responsible role as a passive investor. However, for those wanting to take their ESG integration further, the landscape of ESG frameworks and terminology may be overwhelming.

We can help to navigate investors through ESG complexities and identify the aspects relevant to your business. Our services span across the entire investment process and we offer a wide range of products that enable comprehensive ESG integration:

Our culture is what differentiates us – working at MJ Hudson means working with interesting, intelligent people from diverse backgrounds. We pride ourselves on being a community that brings a collaborative spirit to the workplace.

The importance of responsible investment practices within Alternatives is on the rise. Investment firms recognise the need to create and implement a robust ESG policy and process, but few have the resources and skills required to do this. Integrating ESG into an investment strategy, in such a way that it truly delivers on the value-creation opportunities in their portfolio and pipeline, is a huge challenge.

But we can help.

Our experienced consultants can assess your ESG exposure and determine how relevant factors might impact your current and potential portfolio. Leveraging this knowledge, we can help you design your particular ESG approach fitted to your investment strategy and processes that will not only satisfy the most demanding stakeholder but will also identify undetected risks and capture the most potent opportunities for value creation. We can provide you with the right amount of customisation, helping you develop and deliver the very best ESG strategy for your needs with the benefit of our years of experience.

Without a robust ESG investment policy, institutions leave themselves open to all manner of investment and reputational risks. A bespoke policy based purely on your specific return and deployment objectives may feel like a better fit, but it can suffer from being too narrow, focused on your own institution’s past successes and failures; thus missing the opportunity to draw on a larger body of experience, across the asset class, and beyond.

In a joint effort with your team and your key stakeholders, our consultants will adapt our best practice ESG policy models to match your requirements. We consider the risk appetite and tolerances of your stakeholders while addressing specific investment strategies in your chosen areas of focus.

The result is a policy that helps you identify risks and opportunities before investment and provides the information and tools to manage the existing risks, and those that may yet appear, in your portfolio.

Whilst significant impact from both a risk management and value creation perspective can be made post-investment, high quality due diligence can help focus resources on the right deals, preparing the way for impactful transformation.

ESG issues can be difficult for generalists to identify and evaluate. Even if traditional due diligence approaches may spot, if not wholly understand, some risks, they are much less likely to discover the value-creation triggers in any given business from ESG.

We conduct ESG risk assessments to uncover red flags and identify value-creation opportunities. We build a model for each of your potential investments that considers how the industries will likely evolve, from a sustainability perspective, and evaluate how well each company will likely perform in that new environment.
The result for you is a portfolio that has been significantly de-risked prior to investment and which is better prepared to thrive long term.

With a portfolio covering a wide range of asset classes or strategies, an overarching ESG framework allows for a cohesive approach to monitoring and engagement. Our best-in-class monitoring practices, covering exclusionary, norm-based, and impact screening, provide you with effective handles for engagement. This allows for a discussion on material ESG issues, working towards a portfolio with a more sustainable and lower ESG risk profile.

Our overarching approach caters to the differences between private and public investments, fund investments and secondaries, and importantly, the relationship (and level of influence) between fund managers and underlying securities. This tailored approach enables the comparison of different asset classes within the portfolio, tracking progress over time.

Our experience with multi-asset strategies has provided clear insight into the most material aspects and the most effective way to engage in each asset class. We can help you determine the optimal approach for your portfolio, driving sustainable change, meeting regulatory requirements and satisfying stakeholder demands. This can further result in identifying undetected exposures and capturing opportunities for value creation.

Reporting on the development of ESG exposures is a powerful tool to track and communicate progress. The identification of controversial or undesired exposures, as well as contributions to the Sustainable Development Goals is at the centre of reporting. Industry standards such as for example UN PRI, GRI SASB, TCFD or the EU taxonomy give further guidance to reporting, which we integrate to create one report to satisfy all stakeholders.

We have experience in reporting for a wide array of asset classes and tailor our reports to fit the different needs of the asset classes. With SpringIQ as our proprietary state-of-the-art data platform, we have optimised the data gathering processes with our methodology, allowing for detailed and tailored information aggregation.

The result is a baseline assessment and subsequent annual update assessments in which the fund managers and underlying assets are evaluated on attributes that indicate ESG management and performance. This outcome can subsequently be used to engage with managers or underlying assets to drive sustainable change and support positive impact.

The landscape of ESG is constantly moving and developing rapidly. and so is the relevance of it to your investment practices.

Having been in the field for 10 years, we have seen the picture change. Our interaction with and reviews of thousands of companies over the years have sculpted MJ Hudson Spring’s expertise. We have highlighted many ESG related risks and opportunities that should be considered at the top of the agendas of senior management. We have helped our clients create value from these findings by reducing risks, reaping cost saving potential, and rethinking propositions and business models.

We can help to train your investment managers and analysts to consider an ESG lens in their decision-making and to recognise the practical applications of ESG faster. Incorporating ESG into daily decision-making will ready your investment firm for the sustainable future of finance.