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SBAI publishes a toolkit for the implementation of ESG in different alternative asset classes

Thursday, October 28, 2021
Opalesque Industry Update - The Standards Board for Alternative Investments (SBAI), a global alliance of alternative investment managers and allocators and custodian of the Alternative Investments Standards, released the next instalment of its work on Responsible Investment. A toolkit for asset managers and allocators on the practical implementation of responsible investment in different alternative investment strategies and asset classes. Four strategy specific publications can be found in their Responsible Investment Toolbox.

Much of the guidance provided for implementation of responsible investment is geared towards long only equity portfolios. Whilst there are some elements that are transferable to other alternative asset classes, there are many additional considerations dependent on factors such as asset class, instrument, portfolio concentration, and average holding periods. The toolkit explores these issues along with data considerations in equity long/short, credit, macro, and systematic strategies.

Bradley Belt, Vice Chairman of Orchard Global Asset Management, said "The SBAI's work on Responsible Investment is a valuable contribution to the ongoing discussions on integration of ESG risk factors into investment decision-making. In highlighting the need for different approaches, it makes an important distinction between rigorous investment processes which account for any financially material risks, including ESG risks, and pursuing investment strategies with dedicated ESG objectives. This latest SBAI guidance enhances asset manager and allocator understanding of the ESG issues that are relevant to both the strategy and the asset classes traded."

SBAI's Responsible Investment work aims to help educate managers and institutional investors around the nuances of ESG and Responsible Investment both when integrating financially material ESG risk into investment and risk management processes, and when running dedicated products with specific ESG objectives.

Maria Long, Research and Content Director of the SBAI, said "Our mission is to solve for better and improve industry outcomes. Our Working Group discussions have highlighted the importance of allocators and asset managers being able to have conversations that take into account the nuances of different alternative investment strategies. Through collaboration with our community of asset managers and allocators, this toolkit provides guidance on implementing robust and thoughtful frameworks and provides key topics for discussions between asset managers and investors to ensure any ESG objectives are aligned."

This toolkit was a result of the work within the SBAI's Responsible Investment Working group of over 150 industry professionals from the SBAI community of over 140 asset managers representing over $1 trillion in AUM and over 90 institutional investors overseeing $4 trillion in assets.

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