Future Standard
Institutional responsible investment Policy

This Future Standard Institutional Responsible Investment Policy covers the activity across all the investment strategies that we offer to institutional clients at Future Standard. For the avoidance of doubt, our adoption of this Responsible Investment Policy does not (and will not) compromise our primary responsibility to pursue attractive risk-adjusted returns for our investors; it being understood that Responsible Investment considerations (to the extent unrelated to the financial profitably or viability of an investment) will not be a dispositive factor with respect to an investment decision and no investment decision will be premised upon non-pecuniary factors.

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This includes all Primary, Secondary, Digital Infrastructure and Direct/Co-investment strategies, along with bespoke client mandates. How the responsible investment practices are implemented will vary based on strategy, asset class and the nature/structure of the investment.

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There is a separate policy that covers those strategies managed by Future Standard for our retail clients.

The oversight of the responsible investment process and the consideration of material sustainability and governance characteristics sit with the Responsible Investment Steering Committee. The Responsible Investment Steering Committee’s purpose is to support Future Standard’s on-going commitment to the consideration of material sustainability and governance issues in support of our fiduciary duty.

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Implementation of the responsible investment process at Future Standard sits with the different investment teams. Given the nature of our investment strategies, often we will be making Secondary or Direct/Co-investments with General Partners (“GPs”) where we have Primary investments. Further, there is significant engagement across the investment teams with respect to responsible investment practices.

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For further information on the governance of Responsible Investment at Future Standard, please see the Future Standard Responsible Investment Steering Committee Charter, available at www.futurestandard.com.

Through our existing institutional investment advisers, we have been a signatory of the UN’s Principles for Responsible Investment (“PRI”) since September 2015. As a PRI signatory, we commit to six voluntary and aspirational investment principles, which are a menu of actions for incorporating the consideration of sustainability and governance issues into the investment process. By implementing the Principles, signatories contribute to developing a more sustainable and resilient global financial system.

We are signatories of ILPA's Driving Inclusion in Alternatives initiatives demonstrating commitment to respectful, high-performing and inclusive cultures across the private markets’ ecosystem.

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At Future Standard, we do not engage directly with politicians or regulators with respect to responsible investment practices or regulations. The organizations referenced above do engage on behalf of their signatories and members to pursue policies that are supportive of the long-term interest of financial markets.

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All political contributions to public officials and political activities made by Future Standard and our employees are monitored for compliance with the relevant provisions of the Investment Advisors Act of 1940.

At Future Standard, we invest across private markets with a focus on Private Equity, Private Credit, Digital Infrastructure and Real Estate asset classes. We take a multidisciplinary approach, using collaboration and shared networks to drive innovation and expand access to top sponsors. With 30 years of experience, we seek to leverage strong partnerships and deep networks to unlock proprietary deal opportunities. We are middle-market specialists, providing access to high-growth middle market companies and top-quartile sponsors. This investment universe shapes our responsible investment approach.

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Although the implementation of our responsible investment approach varies depending on the overarching investment strategy, investment structure and asset class, our philosophy is universal. We want to understand the financially material sustainability and governance issues that can have an impact on the financial performance or viability of the underlying portfolio company or assets valuation regardless of whether we are investing directly or through a GP.

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Along with the dedicated responsible investment due diligence with respect to direct investments, our teams also complete commercial and operational due diligence on all GPs with which we partner. The commercial due diligence underwrites the GP’s organization, the team and turnover, and track record, among other things. It is during the commercial due diligence that responsible investment is covered. The operational due diligence underwrites areas of operations, including compliance, accounting cash management, and information technology.

Future Standard’s responsible investment due diligence process is based on assessing both the responsible investment processes for direct investments and at the GP whose fund we are investing in, or are investing alongside, along with the underlying portfolio company/ies exposure to industries that may have elevated sustainability and governance risks. The two main tools for implementing Future Standard’s responsible investment process are our proprietary ‘Responsible Investment Scorecards’– one focused on GPs and one focused on Portfolio Companies.

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A summary of the responsible investment due diligence is included in investment memos, including relevant ‘Responsible Investment Scorecards’ and, if relevant, exposure to industries with elevated sustainability risks. Where there is a requirement to continue to monitor exposure to a specific sustainability issue, this will be referenced in the investment memo.

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GP Responsible Investment Scorecard – The proprietary Future Standard Responsible Investment Scorecard aims to give the investment team an understanding of the overall responsible investment practices at the GP. The output is a score ranging from 0-5 based on the weighted aggregate performance across a number of topics, including policy and governance, value creation, reporting, industry group commitments, and industry exposure.

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Portfolio Company Responsible Investment Scorecard – The proprietary Future Standard Portfolio Company Responsible Investment Scorecard aims to give the investment team an understanding of the exposure to and management of sustainability and governance topics at individual portfolio companies. The output is a score ranging from 0-5 based on the weighted aggregate performance across a number of topics. This includes the score from the Responsible Investment Scorecard, the company’s regional and industry exposure, along with separate scoring on environmental, social, governance, and corporate citizenship topics.

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The utilization of these ‘Responsible Investment Scorecards’ will vary based on the strategy and asset class.

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Primary Private Equity – When making Primary Private Equity fund investments, the investment team are responsible for compiling the GP Responsible Investment Scorecard. Along with the GP Responsible Investment Scorecard, the investment team will engage with the fund’s GP to discuss their approach to responsible investment and get a better understanding of how the GP manages sustainability and governance opportunities and risks at their portfolio companies.

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Secondary Private Equity – Due to the breadth of GP relationships across Future Standard the Secondary Private Equity investment processes leverages the GP Responsible Investment Scorecards compiled by the Primary investment team. In a circumstance, where a fund’s GP has not been assessed against the GP Responsible Investment Scorecard, the team will conduct this assessment. The Secondary investment team will also assess the industry exposure of the underlying portfolio, particularly with respect to industries that may have elevated sustainability risks.

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Direct/Co-Investments – For Direct/Co-Investments, typically these will be investments with GPs that Future Standard already has a relationship with, we will therefore have a completed GP Responsible Investment Scorecard. If a Responsible Investment Scorecard is not available, it will be compiled as part of the commercial due diligence process. Alongside the GP Responsible Investment Scorecard, we will compile the Portfolio Company Responsible Investment Scorecard. Where an investment has exposure to an industry with elevated sustainability risks, Future Standard may opt to not move forward with the investment.

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Private Credit – The majority of the Private Credit deals that Future Standard’s private funds invest in are typically sponsor backed, typically with GPs that Future Standard has a preexisting relationship. The Private Credit investment team will leverage the existing GP Responsible Investment Scorecard to get an understanding of the level of responsible investment due diligence that the sponsor will have done on the borrower. While the Private Credit team is not prohibited from investing in specific sectors, where an investment has exposure to an industry with elevated sustainability risks Future Standard may opt to not move forward with the investment.

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Real Estate – The GP Responsible Investment Scorecard is used for all Real Estate investments with responses reviewed to confirm that there is appropriate implementation and oversight of responsible investment by the GP. The Real Estate team will focus specifically on the availability and cost of insurance, where these may have an impact on the investment this will be referenced in the investment memo.

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Digital Infrastructure –  Future Standard makes direct equity and direct credit investments in the Digital Infrastructure asset class, typically without the involvement of a GP.  During the applicable due diligence process prior to the consummation of an investment, the Digital Infrastructure investment team will complete a Responsible Investment Scorecard that summarizes the responsible investment due diligence that has been conducted with respect to the transaction (inclusive of the portfolio company, borrower, and/or assets).  The Responsible Investment Scorecard will be appended to the investment committee memorandum and any identified associated risks to the financial profitability or viability of an investment will be discussed.  While the Digital Infrastructure team is not explicitly prohibited from investing in specific sectors, such risks (if not appropriately mitigated) may result in Future Standard determining not to move forward with the investment.

Future Standard has an ongoing monitoring and engagement process. The team regularly engages with GPs through annual meetings and advisory boards, along with quarterly and annual reports. Future Standard also participates in interim meetings and calls with GPs to understand developments in their responsible investment processes and any changes in the sustainability characteristics of the underlying portfolio. Where Future Standard has a direct relationship with the underlying portfolio company, whether in the Direct/Co-Investment strategy, Private Creditor Digital Infrastructure strategy, the investment team may periodically, as necessary and/or commercially practicable engage to ensure appropriate management of financially material sustainability and governance topics.

Future Standard’s responsible investment approach is centered on understanding the financially material sustainability and governance factors that can potentially impact an investment’s performance. Although materiality is predominantly derived from the idiosyncratic characteristics of the applicable investment, we are aware that certain sustainability topics are increasingly considered to be systemic. As such, we aim to focus on these topics across all investments and our operational activities.

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Human Capital - Future Standard is a signatory of ILPA’s Driving Inclusion in Alternatives. As part of our commitment to furthering inclusion within the investment industry, we actively ask our partner GPs about their human capital management approach. We believe that GPs who actively look to include a diverse set of viewpoints can better support our fiduciary duty in delivering superior investment performance for our clients.

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Future Standard has the ability to assess emerging and diverse managers and to support clients that have dedicated emerging manager programs.

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Climate Change - Future Standard is aware of both the risks and opportunities that climate change, adaptation and mitigation pose to the financial performance and/or viability of investments. We are actively assessing our approach to managing climate change risks, while also maximizing opportunities.

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Further to this, we are investigating how we can manage our portfolios in a way that is complementary to the increasing ambitions from our clients around Net Zero, whilst keeping our fiduciary duty at the forefront of all investment decisions. It is important to recognize that for Future Standard, Net Zero is more nuanced relative to other investment managers. The majority of our investment strategies do not allow for direct contact or engagement with underlying portfolio companies, the key driver for achieving real world decarbonization and Net Zero. As a result, our ability to influence decisions around future strategy and commitments that underlying portfolio companies may make with respect to Net Zero is limited.

Future Standard aims to foster a work environment where employees uphold the highest standards of professionalism and excel in their roles. This includes providing comprehensive training on preventing discrimination and harassment. We are also committed to providing our investment teams with training on the effective implementation of our responsible investment process, ensuring they are equipped to appropriately consider responsible investing factors and make informed decisions that align with our long-term objectives.

At Future Standard, we are committed to transparency with our clients, providing clear insights into the investments we manage on their behalf. To this end, we publish an ‘Responsible Investment Report’ that details our responsible investment process and highlights the sustainability characteristics of our portfolios.

At Future Standard, we are looking to support our clients as they seek to access private markets. We understand that different clients have different approaches with respect to the implementation of responsible investment and sustainability. We look to engage clients to understand their responsible investment needs and how we can help meet them.

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Where practicable, we seek to support these client specific requests relating to the sustainability characteristics of their specific mandates. Such requests may include exclusions of specific industries that an individual client does not want financial exposure to. For other clients they may be looking to support emerging and diverse managers through their private market investments.

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Furthermore, we seek to support our clients by providing bespoke reporting to them to give greater insight into the responsible investment process and sustainability characteristics of their investments.