For the first time this year, atrade association of “due diligence professionals” asked itsmembers whether they were thinking about the risks posed by sexualmisconduct. About 11 percent of survey respondents said they'vestarted questioning prospective fund managers about sexualharassment. (Photo: Shutterstock)

|

(Bloomberg) –Pension fund managers are starting to see sexual harassment as a material risk to theirinvestments, and they're going to be asking more questions.

|

AP2, a $38.5 billion Swedish state pension fund, is consideringways to evaluate private equity firms on their policies around the issue, making it one of thebiggest international investors put sexual misconduct on its radarfor due diligence.

|

Earlier this year, the $350 billion California Public Employees' Retirement Systemupdated its governance policies to urge companies to disclosemore about sexual-harassment settlements and their preventativepolicies.

|

“We want to ensure that the companies we invest in have the bestcompetence,” Eva Halvarsson, chief executive of AP2 told Bloombergat the Gender Smart Investing Conference in London last week.

|

AP2, like many socially responsible funds, already evaluatesmanagers on gender diversity. But the process of assessing therisks that manifest if a given culture tolerates — or simply ignores — sexualharassment is harder. Halvarsson said AP2 was still grapplingwith how to go about incorporating these questions.

|

Nonetheless, investors are asking. For the first time this year,a trade association of “due diligence professionals” asked itsmembers whether they were thinking about the risks posed by sexualmisconduct. About 11 percent of survey respondents said they'vestarted questioning prospective fund managers about sexualharassment.

|

The trade group, the Investment Management Due DiligenceAssociation, recommended investors look carefully at humanresources processes, departures and a manager's use ofnon-disclosure agreements. The Institutional Limited PartnersAssociation, the leading private equity trade group, is alsoconsidering guidelines to steer investors' approach to theseissues.

|

“These are early days, and what we're finding is a mixed bag,”said Katherine Pease, managing director and head of impact strategyat Cornerstone Capital. The New York-based firm said it is alsotalking to managers about their gender and sexual harassmentpolicies in order to learn more about risks and costs.

|

“If you had asked people five years ago is sexual harassmentmaterial, they would have said, 'It's a compliance issue, it's notthat big a deal to us,”' said Suzanne Biegel, founder of Catalystat Large, a U.S. investment firm that focuses on gender issues. “Inthe last 18 months everything has changed.”

|

READ MORE:

|

Public pensions may be next crisis, says PGIM'sHunt

|

4 retirement plan sponsors with pensionwoes

|

5 questions to overhaul your sexual harrassmentpolicy

|

Copyright 2018 Bloomberg. All rightsreserved. This material may not be published, broadcast, rewritten,or redistributed.

Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.

  • Critical BenefitsPRO information including cutting edge post-reform success strategies, access to educational webcasts and videos, resources from industry leaders, and informative Newsletters.
  • Exclusive discounts on ALM, BenefitsPRO magazine and BenefitsPRO.com events
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.