Hedonova's approach to navigating ESG considerations in alternative investments

Hedonova’s ESG strategy is inclusive and adaptable to make the alternative investment sphere as uncomplex and transparent for investors

By Alina Kalam

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Alexander Cavendish, CEO, Hedonova, a US based Hedge Fund
Alexander Cavendish, CEO, Hedonova, a US based Hedge Fund

Published: Mon 13 Nov 2023, 1:40 PM

In recent years, there has been a shift in the way investors approach their investments. More and more investors want to be actively involved in their investment decisions and expect complete transparency from their investees. Of the several factors investors are vigilant about, one of the most significant are ESG or environmental, social, and governance factors. Investors, especially in the alternative investment space, are no longer okay with the idea of their investments harming the environment, furthering the inequity gap, fuelling the climate crisis, or widening other pressing disparities in general. To keep up with the demand for ESG-conscious investments and products in the alternative investment landscape, many alternative investment companies and financial institutions are integrating ESG considerations in their investment process. Here is how leading global alternative investment firm Hedonova navigates the ever-evolving ESG landscape in its investment offerings.

ESG Metrics

At present, a standard, universal approach to ESG is lacking. But several institutions are always in pursuit of developing clear and easy-to-follow ESG standards. These include the United Nations Global Compact (UNGC), the Principles for Responsible Investment (PRI), the Global Reporting Initiative (GRI), the Carbon Disclosure Project (CDP), the Sustainable Accounting Standards Board (SASB), and other institutional bodies. Hedonova factors in the following ESG considerations laid down by these parent organisations into their strategy:

  • Environmental metrics, such as carbon emission levels, energy usage/ efficiency, water usage/ wastage, wastewater recycling, environmental and green-use certifications, and renewable energy usage.
  • Social factors, such as inclusivity, employee diversity, adherence to human rights, and employee safety, health, and satisfaction levels.
  • Governance metrics, including board/ management diversity, shareholder/ stakeholder rights, anti-corruption policies, political beliefs, and ethical business practices

ESG approach Hedonova follows

Research and due diligence

Hedonova consistently does its research and due diligence by collating, analysing, and leveraging a wide and credible range of data resources. These include ESG ratings, ESG assessments, KPIs metrics, internal data, impact data, reporting data, human capital, and any other data that gives us insight into the ESG compliance levels of our products.

ESG Policy Integration

Hedonova has experts that assess how well an investor’s portfolio complies with ESG criteria. It engages with stakeholders, clients, and collaborative partners to understand how to integrate ESG considerations into its policies and regulations. Our centralised framework clearly lays down how to identify ESG risks and opportunities and integrate them into all stages of the investment journey.

Independent and collaborative risk management

Hedonova has specialised experts with over 17 years of industry experience that conduct ESG risk analysis and come up with centralised investment strategies to help investors mitigate risk and unlock long-term returns simultaneously. We have a dedicated team that keeps a watchful eye on the fluctuating ESG landscape consistently. Hedonova also collaborates with industry leaders and organisations to get a better understanding of best sustainable investment practices, new and existing ESG challenges, and other factors.

Impact Reporting and Investing

Hedonova maintains complete transparency with its investors, which is why, we ensure our investors get access to detailed ESG reports and disclose the findings of our impact assessments. These reports capture the performance of core ESG factors, the overall positive progress, and the negative side effects of these metrics.

Ultimately, Hedonova’s ESG strategy is inclusive and adaptable to make the alternative investment sphere as uncomplex and transparent for investors.

— Alina Kalam is an independent business journalist.

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