Sample investment mandate clauses

Adopt investment beliefs and policies

In carrying out its duties under this agreement, the Investment Manager will manage the client’s portfolio in line with the client’s investment beliefs and responsible investment policies, copies of which are attached as Appendix 1 to this agreement.

The manager will also ensure the portfolio is managed in line with the Principles for Responsible Investment, to which the client is a signatory.

Integrate ESG issues into investment decision-making

Consistent with its fiduciary duties and with the client’s investment beliefs and responsible investment policy (copies of which are attached as Appendix 1 to this agreement), the Investment Manager will establish a structured process for integrating environmental, social and governance issues into its investment processes and decision-making.

The Investment Manager will ensure that its staff apply due care and diligence to following this process The Investment Manager will report annually on the implementation of this process and on how the analysis of environmental, social and governance issues has influenced investment decisions and portfolio performance,

Align investment time horizons

The Investment Manager will have a process for monitoring current or potential investments in relation to relevant long-term factors such as ESG concerns. The Investment Manager will ensure that its staff apply due care and diligence to applying this monitoring process, including considering the extent to which such long-term factors generate investment risks or opportunities.

The Investment Manager will report annually on the implementation of this process. The Investment Manager will report annually on portfolio turnover, including the costs incurred from portfolio turnover. The Investment Manager will, as part of this reporting, provide an explanation of any divergence from turnover expectations.

Stewardship

The Investment Manager will be an active owner, implementing a programme of engagement and, where relevant, voting, aligned with the Client’s responsible investment beliefs and policies (copies of which are attached as Appendix 1 to this agreement). The Investment Manager will agree engagement priorities with the client on an annual basis. Where appropriate, the Manager will provide the Client with the opportunity to join company meetings.

The Investment Manager will participate in, and promote, stewardship codes in countries relevant to the investment portfolio.

The Investment Manager will report annually on the financial outcomes and the environmental, social and governance outcomes that have resulted from these activities. The Investment Manager will also report on how stewardship activities have influenced its investment decisions.

Public policy engagement

The Investment Manager will allocate resources to public policy engagement on responsible investment-related issues, in line with the Client’s investment beliefs and responsible investment policies, copies of which are attached as Appendix 1 to this agreement.

The Investment Manager will agree engagement priorities with the Client on an annual basis, and will report annually on progress against these priorities.

Reporting

In addition to the specific reporting requirements above, the Investment Manager will report annually on:

• the staff and other resources it has for the implementation of its responsible investment commitments and for the analysis of ESG issues;
• how its compensation structures align with the objectives of the mandate;
• the internal and external ESG research it uses in its investment research and decision-making, including information on its chosen research providers and on research expenditures;
• how its responsible investment and ESG-related activities (investment research and decision-making, active ownership, policy engagement) have affected the underlying value and strategy of the portfolio.

The Manager will allow access by the Client to its staff and systems to monitor ESG integration in investment decisionmaking.