Center for Sustainable Business | ImpactAlpha: How LPs can better assess sustainability-linked value creation

The NYU Stern Center for Sustainable Business, or CSB, has researched the Return on Sustainability Investment, or ROSI, for a decade, working across industries and asset classes. We have consistently found that sustainability can drive significant value across the value chain. Through hundreds of interviews and engagements, we have also found that GPs are not tracking ROSI and LPs are not asking them for that information.

In response, and working together with an advisory group of Limited Partners as well as guidance from Institutional Limited Partners Association, or ILPA, CSB has introduced a set of five value creation/presentation questions that asset owners can use to explore how well asset managers and corporate executives (especially in private markets) are tracking and investing in sustainability-linked value creation.

Pension and endowment fund managers tested the beta version with their General Partners and their feedback was incorporated into the final set of questions and guidance that was recently released and is available as an open source tool for asset owners. The asset owners used the tool in different ways: most incorporated it into their engagement conversations, some added one or more of the questions into their due diligence questionnaire. All found it a useful addition to their non-financial ESG reporting questions.

Read the full article on ImpactAlpha here.