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Responsible Investing

  • About
  • Investment Guidelines

Commonfund’s investment programs are designed to enhance the financial resources of long-term institutional investors and Commonfund recognizes that environmental, social and governance (“ESG”) factors may have a material impact on long-term investment performance.

Commonfund considers ESG factors as part of its fundamental investment analysis and is a signatory to the Principles for Responsible Investment.

Commonfund does not exclude particular industries, geographic regions or strategies based on ESG factors; rather we take ESG factors into consideration as part of our fundamental investment analysis where such factors have the potential to impact the value of our portfolios.

Commonfund recognizes that context matters and that the risks and opportunities posed by ESG factors can vary greatly depending on geography, industry and asset class. As an investment manager implementing diverse investment strategies, the analysis of ESG factors is adjusted to reflect the specific attributes of those different strategies. 

Implementation

  • Roadmap to an Effective ESG Program

    img-roadmap-for-esg-portfolio

    For illustrative purposes only, with no guarantee that future programs will be offered. Subject to adjustments. This presentation is not intended to constitute an offering of interests in any partnership, which will be made solely by means of a Confidential Offering Memorandum provided to qualified investors. For a complete description of the terms of these offerings, please refer to the Confidential Offering Memorandum which investors should read with care.  Please see Important Notes. Any such offerings will be made solely through private placements to qualified investors, and will be made by Commonfund Securities, Inc., a registered broker dealer, and member of the FINRA.

  • Portfolio Construction

    The consideration of ESG factors is part of Commonfund’s standard investment analysis process across all asset classes and subject to oversight by the relevant Investment Committee.

    • Monitor (Manager Due Diligence): ESG considerations are reviewed alongside more traditional indicators such as team, strategy, performance and terms of investment. As part of Commonfund’s due diligence process we ask potential managers a series of questions about whether and how they integrate analysis of financially material ESG factors into their investment process. These questions are included in Commonfund’s Due Diligence Questionnaire, which managers complete prior to initial hire and then update annually or, in private capital programs, when a re-investment decision is being made. We also ask about these issues during on-site visits to our managers and regular calls throughout the year.  In addition to ESG factors, Commonfund also promotes diverse managers in our client portfolios.  Diverse managers can submit their information to our Diverse Manager Portal to be reviewed and included in our manager database.

    • Measure: We have conducted periodic and targeted reviews of our portfolios to assess their exposure to ESG factors and are in the process of refining our approach to this aggregate portfolio analysis. Where relevant, Commonfund may use research provided by third-party research specialists to analyze the risks and opportunities that ESG factors may pose for our portfolios.

    • Manage: Identifying and valuing the impact of ESG factors on performance and risk is particularly difficult. In partnership with our managers, Commonfund is undertaking original research to continue to evaluate the impact of ESG factors on investment portfolios and the most effective methods to address these issues. In addition to the manager due diligence process described above, once a manager has been approved for investment, Commonfund may negotiate provisions with the manager addressing whether and how ESG factors will be reflected in the construction of the portfolio; reporting on the impact of ESG factors within the portfolio; proxy voting; and any targets relating to ESG integration.

  • ESG Training

    Best practices in ESG integration are continuously developing and through conversations with peers, involvement in industry working groups and original research in partnership with our investment managers, Commonfund regularly reevaluates its approach to ESG integration and disseminates best practices throughout the organization.

  • Assessment of ESG Performance

    We set formal objectives for Commonfund’s ESG activities annually and review our performance against those objectives at the end of each period. The ESG Policy Officer reports to the Senior Executive Group on a quarterly basis. 

  • Proxy Voting

    Commonfund takes its obligation to vote proxies seriously. As a manager-of-managers, we direct our managers to vote proxies on our behalf. Commonfund’s Proxy Voting Policy explains that Commonfund is a signatory to the Principles for Responsible Investment and believes that environmental, social and governance factors may have a material impact on investment performance. Accordingly, Commonfund asks its managers to consider whether ESG factors are material to the investment performance of the company in question and to support proposals addressing such factors when those factors are material. 

  • Promotion of ESG Considerations

    The Commonfund Institute is the focal point for Commonfund’s educational and professional development activities. The Commonfund Institute provides events for trustees and other leaders of nonprofit organizations introducing them to ESG factors. Commonfund  also publishes blogs, articles and white papers about ESG best practices and supports research efforts around ESG factors by collaborating with industry initiatives.