ICGN - GISD Alliance Model Mandate Guidance

ICGN - GISD Alliance Model Mandate

COMMITMENTS

There is an increased public and political expectation that investors should contribute to long-term sustainable value creation, by contributing to the UN Sustainable Development Goals and exercising active stewardship of the assets for which they are responsible.

For this to happen, there should be an alignment of incentives between asset owners and their managers and a shared understanding of the outcomes being sought. The terms of the mandate agreed between them are crucial to achieving these objectives.

The primary purpose of the Model Mandate guidance is to encourage asset owners to ensure that their stewardship and sustainability objectives are fully reflected in investment management agreements (IMAs) and contract terms with the managers they have selected to manage their assets, and to provide practical assistance to enable them to do so.

Achieving long-term sustainably value creation requires action not just from asset owners and asset managers but those who advise them and the organizations responsible for setting the regulatory framework and standards within which investors operate. For this reason, ICGN and the GISD Alliance invite these parties to commit to using and promoting the Model Mandate.

ICGN and GISD Alliance encourage:

Asset owners to use the Model Mandate as the basis for negotiating mandates with their asset managers, and to disclose to their own clients and beneficiaries the extent to which it has been used in their contracts with asset managers.
Asset managers to review their own standard contract terms and reporting to clients against the Model Mandate, and to be willing to use draft clauses from the Model Mandate when requested by clients.
Investment consultants and other advisers to raise awareness of the Model Mandate among their clients, and to reflect it in the advice that they provide.
Relevant regulators, standard-setters and investor bodies to endorse the Model Mandate and consider how it could be adopted or adapted for use in their markets.

Disclaimers Acknowledgements About

GUIDANCE

Part 1: Introduction

1.1 Context
1.2 Purpose of the Model Mandate
1.3 Structure of the Model Mandate
1.4 How to use the guidance

Part 2: Sustainable Development Investing

2.1 What is Sustainable Development Investing?
2.2 What should investors do?

Part 3: Before Negotiating Mandates

3.1 Fiduciary duties and regulatory requirements
3.2 Investment strategy
3.3 Investment policies and procedures
3.4 Mandate design and asset manager selection
3.5 Negotiating the investment management agreement
3.6 Reviewing the mandate and asset manager’s performance

Part 4: Alignment

4.1 Applying the asset owner’s investment policies
4.2 Portfolio design
4.3 Systemic risks
4.4 Fee structures, incentives and remuneration
4.5 Sustainable development investing – draft clauses

Part 5: Stewardship

5.1 Exercising stewardship responsibilities
5.2 Voting rights and oversight
5.3 Asset manager oversight of third parties
5.4 Securities lending
5.5 Sustainable development investing – draft clauses

Part 6: Accountability

6.1 Culture and capabilities
6.2 Risk management
6.3 Conflicts of interest
6.4 Commissions and counterparties
6.5 Asset manager reporting to clients
6.6 Sustainable development investing – draft clauses