June 25, 2024

BCI selectively engages external partners and managers, where appropriate, to create value for our clients by increasing access to opportunities. We evaluate every external firm’s ESG practices before allocating or increasing capital to its funds.

Our in-house, proprietary ESG External Manager Framework was established in 2020 to provide consistency and coordination for how we assess external firms across all asset classes. We updated the framework in 2023 to ensure it stays relevant to our investment strategies and reflects how ESG integration and stewardship practices are evolving.

The framework provides clear definitions and guidelines, covers holistic ESG matters such as equity, diversity, and inclusion (EDI) at the management firm, and collects information that improves reporting and practices at BCI.

The Framework
Our framework has multiple dimensions. We assess the extent of ESG integration into the firm’s investment processes, the resources and tools provided to staff, and whether the firm’s ESG stewardship practices are aligned with BCI’s corporate engagement priorities. This can include the firm’s formal ESG policies, who is accountable and who oversees ESG matters, and concrete examples of how ESG risks and opportunities are evaluated and considered. We also pay attention to the firm’s internal EDI policies and commitments.

We conclude by categorizing our external manager and partners’ ESG practices into one of the following groups:

  • Immaterial: ESG may not be applicable to some managers due to very short holding periods, the type of asset they hold, or strategy they pursue.
  • Developing: managers that recently launched an ESG program, and are building resources and processes.
  • Committing: managers with established policies and procedures, dedicated ESG resources, and internal training.
  • Advancing: managers or strategies seeking positive outcomes in pre-identified ESG themes, such as clean energy.

Using the Results
In fiscal 2024, we conducted 23 reviews using the updated framework, reflecting all new external partners and managers, to ensure our standards extend beyond our in-house activities. Following the assessment, we selectively engage with our external partners and managers to promote continued improvement over time and may make specific requests for improvements.

For example, BCI’s Managing Director, ESG dedicated to private equity engaged with more than 50 per cent of our private equity fund portfolio general partners, based on assets under management, in fiscal 2024 on ESG and climate-related opportunities to align expectations, exchange expertise, and enhance performance. Key highlights include organizing educational sessions and assisting our general partners in adopting our industry-leading ESG frameworks and engagement practices, with an emphasis on financial linkages.