ESG Integration in Alternative Asset Management: A Practical Framework

1. From Policy to Process

Most ESG policies explain what a manager believes; far fewer explain what the team actually does. Our framework starts with mapping each ESG factor to a specific decision point in the investment process.

• Pipeline screening: sectors and geographies we will not underwrite.
• Diligence: questions that must be answered before any IC discussion.
• Documentation: how ESG risks show up in covenants, pricing, and structure.

2. Implementation by Asset Class

ESG is not monolithic. We show how the same framework looks very different across private credit, real estate, and infrastructure.

• Private credit: governance and stakeholder treatment heavily influence covenant design and sponsor selection.
• Real estate: environmental and social factors directly affect capex, lease‑up, and exit values.
• Infrastructure: policy, permitting, and community impact often drive binary outcomes.

3. Measuring What Matters

We highlight a small set of KPIs that we consider decision‑useful, as opposed to reporting metrics that exist primarily for disclosure.

• Forward‑looking metrics tied to downside risk (e.g., regulatory change, physical risk).
• Governance indicators that correlate with historical loss experience.
• Portfolio‑level aggregation that shows exposures by theme rather than by checkbox.

The result is an ESG program that is tightly integrated with risk management and return expectations, rather than a parallel reporting exercise.