How do you engage with investors?

Increased scrutiny of diversity and inclusion practices by investors has been one of the most significant drivers of enhanced DE&I practices in private markets asset classes. EY recently published a study about the four investor engagement priorities for 2021. These were climate risk, human capital, diversity and covid-19.

“As an organization, questions around D&I have been part of our diligence process for as long as I can remember,” says Raphaelle Koetschet, head of Caisse des Depots’ funds investment team. “But this is clearly an issue that has remained overlooked by the industry as a whole until recently. The reactions of GPs to our questions have certainly changed and we’re thrilled to see that D&I is now at the frontline of conversations.”

Means of engaging with investors on DE&I range from formal reporting, to educational events, use of the annual investor meeting, thought leadership content and the endorsement of industry-wide initiatives such those promoted by Level 20 and the Institutional Limited Partners Association. “Certainly, you can see that D&I is becoming a more prominent theme for our investors. They are incorporating D&I metrics into their investment criteria,” says Instar’s Sarah Borg-Olivier.

Brookfield’s chief operating officer, Lori Pearson, adds: “We actively engage with our investors on D&I through one-on-one discussions and through more formal investor communications via meetings, webcasts and published materials, such as our annual report and ESG report.”

Brookfield has also become a member of the ILPA Diversity in Action initiative, which brings together LPs and GPs that share a commitment to advancing diversity and inclusion. But perhaps the most productive interactions between LPs and GPs on the subject of DE&I are those informal conversations of equals, where both parties share their aspirations, successes and failures.

“Discussions with LPs tend to focus on KPIs and a status quo assessment for the most part. But in some exceptional circumstances we move away from talking about targets and measurement and towards the actual contribution that diversity brings and the link to success,” says Partners Group’s Esther Peiner. “Those are the conversations I enjoy the most.”

“Access to diversity disclosures that include the workforce, and the board is increasingly important to investors. They want transparency from us on this topic,” adds Coralie De Maesschalck of Kartesia. “Knowing what D&I means to each of our investors is also a way to engage with them as it allows us to address their needs and share best practices with them. Most are also working on D&I themselves so brainstorming always leads to interesting debates.”