Fund Advisory

ESG education operationalizes a firm’s ESG program by ensuring that all members of the investment team are conversant in ESG and the firm’s specific program elements. It is an increasingly frequent requirement of LP stakeholders during and after fundraising. Malk partners with the GP to conduct training sessions right-sized for the firm’s team, ESG commitments and goals, and current knowledge base.

Common ESG Training Topics

• “ESG 101”
• Relevant LP expectations
• Regulatory and market standards
• Current ESG trends
• Firm-specific ESG policy and integration processes
• Case studies
• Sector-specific deep dives

ESG reporting is an effective tool for GPs to showcase how they execute upon ESG commitments and goals to various stakeholders. Malk assists clients with both LP-facing and public ESG reporting at all levels, from AGM and annual letter content to comprehensive standalone ESG reports. 

Annual ESG Report Goals

• Showcase strong ESG results to key stakeholders and celebrate ESG successes of the year
• Demonstrate integration of how commitments made in ESG policies are lived out in practice
• Create accountability across stakeholders 
• Meet expectations of ESG-sophisticated limited partners to satisfy investor demand
• Aggregate ESG information with consistent year-over-year data points to build a cohesive narrative around the evolution of a GP’s ESG program

Malk has helped GPs produce over 20 LP-facing and public ESG reports to date. Sample reports include annual ESG reports for L Catterton and Palladium.

The UN Principles of Responsible Investment (UNPRI) is one of the leading industry groups that encourages the integration of ESG factors into investment and ownership decisions. UNPRI signatories are required to report on their ESG programs annually and ultimately receive a score across each reporting module. Malk understands the full PRI process, from determining when to become a signatory to completing annual reporting. The process can be complex and time consuming and Malk has the expertise to support GPs every step of the way. Malk has supported numerous clients at each stage of the UNPRI lifecycle, from preliminary gap assessments to full reporting.

Gap Assessment

• Malk conducts a gap assessment of a GP’s ESG program prior to becoming a signatory and ahead of a signatory’s first year or reporting.
• The gap assessment emulates the reporting process and allows firms to make necessary programmatic changes in advance of the first reporting year (voluntary or mandatory) to achieve the best possible score and differentiate from peers.
• Malk’s proprietary scoring tool can provide clients with an estimate score and advise on areas of improvement that are tied to score increases.

Reporting

• During the reporting period, Malk supports GPs with the reporting process by aggregating answers, liaising with stakeholders, drafting responses, acting as a resource for PRI related questions, and developing a repeatable process. For recurring reporting, Malk utilizes past responses to expedite the reporting process.
• Once a GP receives a PRI score, Malk discusses the scores and detailed reports with GPs and advises on areas of improvement for the following year.If applicable, Malk also partners with GPs to execute on those score improvement initiatives.
• Ultimately, Malk leverages extensive experience to minimize the burden of PRI reporting and ensure GPs successfully document their ESG programs to receive accurate scores.

The Sustainable Finance Disclosure Regulation (SFDR) is the latest in a line of far-reaching legislative initiatives to add structure, transparency, and accuracy around funds’ sustainability representations. For investors seeking to raise capital in Europe, the SFDR has been a notable topic of discussion with LPs; a strong SFDR-aligned ESG program can be a difference maker in fundraising.

Malk understands the complexities of the SFDR across asset classes and has supported GPs in successfully aligning to Articles 6, 8 and 9, partnering closely with the GP’s legal counsel and investment teams to ensure alignment and defensibility.

Malk's SFDR Support

• Selecting sustainability characteristics that a fund seeks to promote
• Drafting Annex commitments
• Integrating these commitments in asset-level diligence and monitoring
• Training the investment team to ensure that they have the tools and resources they need to uphold the commitments of an SFDR-aligned fund

Developing and codifying a Diversity, Equity, and Inclusion (DEI) strategy ensures accountability in setting and meeting DEI goals and allows GPs to be responsive to increasing DEI inquiries from LPs, particularly during fundraising. Malk helps GPs set a DEI strategy or help drive forward existing objectives.

Malk's DEI Advisory Services

• Gap assessment of current DEI program against goals, LP expectations, and peer practices
• Recommendations for diverse recruiting practices
• Firm-level DEI and/or unconscious bias training
• Employee resource group (ERC) development
• DEI metric collection and tracking