NBPE’s Manager, Neuberger Berman, has a long-standing belief that material environmental, social and governance (ESG) factors are an important driver of long-term investment returns from both an opportunity and a risk-mitigation perspective. The Manager was awarded top scores (5 stars) in the most recent UN-supported Principles for Responsible Investment (PRI) assessment for its ESG integration efforts within Private Equity.
Centered on NBPE’s objective to deliver better investment outcomes, the Board has adopted a Responsible Investment Policy. The policy is subject to periodic review by NBPE’s Board and the Manager’s ESG (Environmental, Social and Governance) Committee.
The Manager uses a reputable, recognised third party to identify companies with past ESG controversies and violations, with the understanding that there may be coverage gaps of non-listed company names. The Manager provides the Board with an update on investments and ongoing monitoring in the context of adherence to the Responsible Investment Policy.
ESG in Private Equity
NB Private Markets also leverages Neuberger Berman’s broader ESG capabilities and resources, including ESG policy and climate strategy, proprietary ESG ratings and data analytics.1
Neuberger Berman has longstanding experience in responsible investing, considering environmental, social and governance factors as important drivers of long-term investment returns from both an opportunity and a risk mitigation perspective.
Three Pillars of NBPE’s Responsible Investment Policy and Implementation
NBPE believes investing responsibly and the incorporation of material ESG considerations can help inform the assessment of overall investment risk and opportunities, which we include as a standard part of our process.
1. Avoid
- Ability to exclude particular companies or whole sectors from the investable universe.
- NBPE expects corporations to uphold fundamental responsibilities as defined by the United Nations Global Compact (UNGC) Principles, OECD Guidelines for Multinational Enterprises, and the United Nations Guiding Principles on Business and Human Rights, in regards to human rights, labour, the environment and anti-corruption. The Manager includes a review of related ESG violations and controversies as a part of its ESG due diligence and monitoring activities.
- NBPE will endeavor to not invest in companies which are engaged in activities related to: controversial weapons, tobacco, civilian firearms, private prisons, and fossil fuels.
2. Assess
- NBPE considers material ESG factors alongside traditional factors in their investment decisions. ESG factors are generally no more significant than other factors in the investment selection process.
- Material ESG factors are formally incorporated in Investment Committee memorandums.
3. Amplify
- Seek to achieve a financial goal by investing in high quality issuers with sustainable business models, practices, products or services and leadership on relevant ESG factors.
NBPE’s Portfolio through an ESG Lens
17%
of the portfolio is deemed to potentially have a positive benefit to people or the environment, such as outlined by the themes of the UN Sustainable Development Goals
As at 30 September 2024.
NB Private Markets believes that incorporating ESG considerations throughout its investment process can potentially lead to more consistent and better investment outcomes by helping to identify both financially material risks and opportunities to drive value. We are focused on long-term partnerships and engaging with our partners to promote ESG integration best practices. Follow the link below to read the full NB Private Markets 2023 ESG Report.
5 Stars
Top scores by UN PRI for Private Equity ESG Integration2
1 Subject to Neuberger Berman’s policies and procedures, including certain information barriers within Neuberger Berman that are designed to prevent the misuse by Neuberger Berman and its personnel of material information regarding issuers of securities that has not been publicly disseminated.
2 For illustrative and discussion purposes only. PRI grades are based on information reported directly by PRI signatories, of which investment managers totaled 3,123 for 2023, 2,791 for 2021, 1,545 for 2020 and 1,247 for 2019. All PRI signatories are eligible to participate and must complete a questionnaire to be included. The underlying information submitted by signatories is not audited by the PRI or any other party acting on its behalf. Signatories report on their responsible investment activities by responding to asset-specific modules in the Reporting Framework. Each module houses a variety of indicators that address specific topics of responsible investment. Signatories’ answers are then assessed and results are compiled into an Assessment Report. Neuberger Berman pays a fee to be a member of PRI and the grades are only available to PRI members. Ratings referenced do not reflect the experiences of any Neuberger Berman client and readers should not view such information as representative of any particular client’s experience or assume that they will have a similar investment experience as any previous or existing client. Awards and ratings are not indicative of the past or future performance of any Neuberger Berman product or service. Moreover, the underlying information has not been audited by the PRI or any other party acting on its behalf. While every effort has been made to produce a fair representation of performance, no representations or warranties are made as to the accuracy of the information presented, and no responsibility or liability can be accepted for damage caused by use of or reliance on the information contained within this report. Information about PRI grades is sourced entirely from PRI and Neuberger Berman makes no representations, warranties or opinions based on that information.
ESG-RELATED DISCLOSURES
The use of ESG factors could result in selling or avoiding investments that subsequently perform well or purchasing Investments that subsequently underperform.
NB Private Markets consists of the following investment strategies that are classified as ESG-Integrated by the Neuberger Berman ESG Product Committee: Private Equity Investment Portfolios and Co-investment Platform, Private Equity Secondary Platform, Almanac ARS Funds, Private Credit Platform, Marquee, NB Insurance-Linked Strategies Platform, Renaissance, Athyrium, and NBAIM Fund-of-Funds Platform. Unless explicitly noted, the ESG integration processes described herein apply solely to the Private Equity Investment Portfolios and Co-investment Platform and Private Equity Secondary Platform (“NB Private Equity”).
This material is intended as a broad overview of the portfolio managers’ style, philosophy and process and is subject to change without notice. Many of the-firm level processes described herein are subject to Neuberger Berman’s policies and procedures, including certain information barriers within Neuberger Berman that are designed to prevent the misuse of material information between the NB Private Markets teams and the public side investment and ESG teams.