Our approach to ESG

Objectives

The manager and the funds are committed to the reduction of greenhouse gas emissions and pollution and will strive to conserve the earths natural resources. Portfolio companies are expected to conduct their business activities in a responsible manner, appropriately manage and protect against recognized hazards, and to safeguard the health and safety of their employees, customers, suppliers, partners and the community.

Portfolio companies are required to comply with all applicable environmental, health and safety regulations and laws of the jurisdictions in which they operate. Portfolio companies will implement programmes and, where appropriate, develop their own policy and objectives with the goal to comply with best practices in managing ehs matters. AIP expects all portfolio companies and their employees to report ehs concerns, to continuously maintain a safe work environment, and to actively participate in helping achieve all ehs goals.

Acquisition evaluation

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

• The target’s existing ESG policies and procedures;
• The target’s performance against applicable environmental laws and regulations in each jurisdiction in which the target has material operations;
• The impact of the target’s operations on the environment, including climate change;
• The target’s performance against applicable occupational safety and health regulations and laws in each jurisdiction in which the target has material operations; and
• The target’s performance against the objectives stated in this Policy.

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

Operational monitoring

Following an acquisition, the transaction team will conduct a comprehensive review of the EHS 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 EHS policy and ongoing monitoring and reporting.

Adoptions of EHS policy

With input from the transaction team and AIP’s Head of ESG, each portfolio company will develop and implement an appropriate EHS policy tailored to the business and operations of such portfolio company and taking into account the scope and degree of EHS risks associated with the business and operations, if it has not already done so.

Areas typically covered include:

• Employee Protection – Develop policies and procedures designed to prevent and reduce work-related injuries and illnesses, and to maintain a safe and healthy workplace.
• Public Safety – Develop policies and procedures designed to prevent injuries and illness to the public and communities served to the extent such injuries and illnesses are related to the operations of the portfolio companies.
• Risk Mitigation – Assess the environmental aspects and safety and health risks of all operations, activities and services, and incorporate practical procedures and controls designed to prevent adverse impacts.
• Environmental Stewardship – Design operational practices to reduce, reuse and recycle waste materials, the mitigation of adverse impact on the environment, and the conservation of natural resources.
• Reporting Framework – Develop and implement procedures for reporting any violations or potential violations of applicable environment, workplace health and safety and occupational laws and regulations.
• Continuous Improvement – Establish and periodically review relevant EHS goals and targets designed to ensure continuous improvement in EHS performance.

Reporting

As part of each portfolio company board meeting, the company’s management team will report on the company’s EHS performance since the prior board meeting. Each portfolio company will submit to the transaction team a completed questionnaire. Completed questionnaires will be used by AIP’s Head of ESG to produce an annual report for each Fund.

At a minimum, reporting will typically include:

• Employee Safety Performance – Statistics concerning reportable injuries, near misses and accident occurrences. This will be in total numbers and utilizing appropriate measures/metrics (e.g., OSHA defined metrics). Also, where applicable, provide the appropriate industry peer group average for employee injury rates (including Total Recordable Injury Rate (TRIR), Recordable Lost Time injuries, fatalities and near misses, or similar as applicable).
• Inspection results – Written reports summarizing the results of any inspections conducted by federal, state or other agencies involving portfolio company facilities and operations, including any findings, citations, fines, etc. and mitigation actions and costs taken or required, if any.
• Ad Hoc Items – Reports answering any specific requests for information made by the Manager.

Annual ESG compliance review and reporting

The annual report will cover the following matters:

• Summary of ESG-related policies and procedures at each portfolio company, confirmation of compliance with all such policies and identification of any potential gaps;
• Employee safety performance and, where applicable, comparison to industry peers;
• Compliance with applicable ESG-related laws and regulations;
• Disclosure of all material violations, investigations, legal actions, fines, and/or citations brought by any regulatory or government agency against or involving the company or its properties arising out of or relating to any environmental, health and safety (“EHS”) matter and relevant response actions or plans and associated costs;
• Summary report on any open EHS issues or issues closed/completed/resolved during the course of the annual report period;
• Summary review of cybersecurity policies, procedures and implementation at each portfolio company and disclosure of any cybersecurity-related incidents and response;
• Reporting of portfolio company employee headcount, diversity statistics and employee initiatives;
• TCFD-aligned reporting; and
• Reporting regarding any employment-related investigations or litigation.