Invest Europe publishes Professional Standards Handbook

The new handbook proposes to make fee calculation and ESG an integral part of the reporting process      

Invest Europe has published its 2015 Professional Standards Handbook and has also updated its investor reporting guidelines.

The new handbook has taken into account new regulations for the European private equity industry, including the Alternative Investment Fund Managers Directive (AIFMD), which came into effect since the last version was updated in 2013 when the industry body was known as EVCA.

Other than reflecting an increased need and desire for greater transparency in reporting from both LPs and GPs, the guidelines also integrated recommendations for the reporting of non-financial disclosure, including environmental, social and governance (ESG) guidelines, as well as greater clarity on reporting metrics.

Dörte Höppner, CEO of Invest Europe, said: “Invest Europe has been at the forefront of setting best practice and industry standards since our organisation was established over 30 years ago and we’ve published professional standards guidance for the last two decades.

“We are proud to continue this important work alongside our investor and fund manager members, who have jointly developed these comprehensive and up-to-date guidelines to ensure the industry operates according to the highest professional and ethical standards.”

Marta Jankovic, Invest Europe’s Professional Standards Committee vice-chairman, and Senior Sustainability and Governance Specialist at APG Asset Management, said the handbook would provide specific guidelines for those looking to make ESG an integral part of their business.

Speaking to Private Equity International, Jankovic said: “The handbook already contained information on ESG in the 2013 version. This has now been updated to reflect how the industry is thinking about the whole topic, not just because investors are asking for it, but because it is important to GPs, their portfolio companies and to wider society.”

Jankovic said that the process had also led to clarifications of the definitions of responsible investment and ESG, while the latter had also been added as a specific item within the reporting guidelines.

“It is more of a guide to say that ESG should not be an afterthought in terms of disclosures to investors, but part and parcel of regular reporting, which is what investors will be increasingly asking for. Not everyone in the market is doing this right now, but it is what investors over time would like to see so we would like this to become best practise.”

“It is what larger LPs right now are pushing for, and also what very good GPs are doing without being prompted. We expect it to be an evolution rather than the whole market to be compliant with it on day one. But there has to be progress.”

Jankovic said that its responsible investing roundtable held two to three times a year, had drawn on LPs, GPs and service providers with “abundant expertise on ESG integration” to determine best practise.

“[The handbook] is grounded in concrete existing practises, which in our mind are best practises, and we have also looked at other responsible investment guidance, such as that produced by the PRI [Principles for Responsible Investment] to see how it could be appropriate to the industry and reflected in the handbook without making the handbook an ESG compendium – GP’s should know where to focus efforts and when to look for further guidance.”

She added: “There are already numerous guidance documents out there that dig into ESG and private equity, so we concentrated on key messages. Still, if you want to know how to properly integrate ESG considerations into your investment activity, this handbook will send you in the right direction.”