ESG is ready for its close-up. After years of being an obscure acronym, ESG (environmental, social and governance) has become a mainstay of the institutional investor vernacular, with a growing number of managers incorporating ESG principles into their investment processes. As asset managers continue to integrate ESG, the impetus is growing for managers to adopt formal ESG policies.

Considering all the different meanings, metrics and organizations available, however, the pathway to developing ESG principles and formalizing a commitment to them can lead in many directions. Some managers may be surprised to know reliable guideposts exist within their investor base — the constituents who know them and have a vested interest in seeing them reach sustainable success.

Given their long-term mandate and diverse set of manager relationships, institutional investors are uniquely positioned to advise on ESG. Investors often have a much broader understanding of industry best pra