Our approach to ESG

Objectives

The Manager and the Funds require that portfolio companies conduct their business activities ethically and in a manner that positively reflects the Manager’s desire that portfolio companies be responsible corporate citizens that are actively engaged with the communities in which they operate. Portfolio companies are encouraged to engage in community outreach and comply with all applicable laws, regulations, and rules regarding the proper conduct of business for its operations and by its employees. The Manager and the Funds expect all portfolio companies to implement and comply with programmes designed to achieve these goals.

Acquisition evaluation

As part of the evaluation of the potential acquisition opportunity (regardless of whether the transaction involves the acquisition of a controlling stake), the transaction team will evaluate:

• The target’s performance against applicable business ethics rules and related applicable laws and regulations in each jurisdiction in which the target has material operations
• The target’s existing corporate governance programmes (including those designed to prevent corrupt practices) to assess the strength or weaknesses of such programmes
• The target’s existing practices in community involvement to assess the strength or weaknesses of such practices
• The target’s performance against the objectives stated in this Policy

The transaction team will summarize the results of its evaluation in Investment Committee Memorandum prepared in connection with evaluating the relevant investment opportunity.

Operational monitoring

Following the acquisition, the transaction team will conduct a comprehensive review of the Governance programme of an acquired portfolio company and the results of such review will be incorporated into the 100-day plan process, which feeds into the development and adoption of the portfolio company’s own policy and ongoing monitoring and reporting.

Social Responsibility

Develop policies and procedures designed to:

• Foster and monitor compliance with all applicable employment, workplace diversity and labour relations laws and regulations in each jurisdiction in which the portfolio company has material operations.
• Establish a framework by which the portfolio company will act as a responsible and active corporate citizen. This may include identifying a focus on charitable giving designed to improve the locales in which the portfolio company operates, address possible customer needs, and improve the standing of the company within their communities. Annually, company leadership will profile this charitable giving plan and total amounts with the Board prior to committing funds.

Corporate Governance

Develop policies and procedures designed to:

• Ensure that the business practices, conduct and operations of the portfolio company and its employees adhere to all relevant appropriate rules, regulations and laws.
• Identify and manage conflicts of interest that may arise in the conduct of the portfolio company’s business recognizing that conflicts may arise between the portfolio company and its employees, vendors and customers, among others.
• Establish appropriate policies and procedures governing the portfolio company and its employees making contributions to political candidates/parties, government office holders, or government organizations. Any such contributions to be made by the portfolio company would require prior approval of the portfolio company’s board of directors.
• Establish adequate controls, processes and procedures to protect the portfolio company against any fraudulent activity.
• Establish adequate controls, processes and procedures designed to prevent the portfolio company and its employees from engaging in corrupt activity.
• Establish adequate controls, processes and procedures to adequately assess and address any associated risks to the business, its employees and its customers.
• Develop and implement practices and procedures designed to promote timely reporting of violations by employees, officers and directors of the portfolio company’s Code of Ethics.
• Establish adequate controls, processes and procedures to safeguard the portfolio company’s confidential information and intellectual property.

Reporting

As part of each portfolio company board meeting, the company’s management team will report on any material developments in the company’s Governance performance since the prior board meeting. In addition, the company’s management will provide to the board as part of the portfolio company’s annual budgeting process, a report that summarizes the portfolio company’s charitable giving plan and total amounts for the following fiscal year.

Annual ESG compliance review and reporting

The annual report will cover the following matters

Social responsibility:

• Subject to, and in a manner designed to protect attorney/client or other privilege, a description of legal actions brought by individuals or groups a gainst the portfolio company, its subsidiaries or affiliates relating to alleged improper conduct (not related to employee or former employee actions)
• Details of contributions made by the company and its subsidiaries, affiliates, foundations to charities/charitable organizations (names; amounts; etc.)
• Details of sponsored charity activities (purpose of event; monetary amounts)
• Details of investments made in companies with links to certain foreign countries of interest

Corporate Governance. In addition to results of annual audits and associated follow up activity:

• Subject to, and in a manner designed to protect attorney/client or other privilege, a description of legal actions taken by or brought against the portfolio company, its subsidiaries or affiliates relating to or arising out of any violations of established policy (number; violation; outcome)
• Details of contributions made by the company and its subsidiaries, affiliates, foundations to political candidates/parties and office holders (names; amounts; etc.)