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Appian Holdings

PRI reporting framework 2017

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Pre-investment (selection)

PE 07. Incorporating ESG issues when selecting investments

07.1. During due-diligence indicate if your organisation typically incorporates ESG issues when selecting private equity investments.

07.2. Describe your organisation's approach to incorporating ESG issues in private equity investment selection.

Appian is a signatory of the United Nations-backed Principles for Responsible Investment (“UNPRI”) and has both privately (in relation to limited partners) and publically (in public disclosures) affirmed its adherence to UNPRI, and therefore its commitment to meeting the highest international environmental, social and governance standards, as follows:

Appian's Investment Guidelines, as codified in the Fund's Limited Partnership Agreement and with reference to its Private Placement Memorandum, are clear in that they specifically state that Appian will adhere to the six Principles of the UNPRI, both in the investment decision making process and inits subsequent portfolio company management.

The Private Placement Memorandum of the Fund discloses to limited partners that Appian is a signatory to UNPRI and Appian publically commits on its website to adopt and implement UNPRI.

As a signatory to UNPRI, Appian incorporates the six UNPRI Principles into its investment due diligence and ongoing monitoring approach for any potential investment, in so far as:

Principle 1: Appian will incorporate ESG issues into investment analysis and decision-making processes

Principle 2: Appian will be active owners and incorporate ESG issues into its ownership policies and practices

Principle 3: Appian will seek appropriate disclosure on ESG issues by the entities in which it invests

Principle 4: Appian will promote acceptance and implementation of the Principles within the investment industry

Principle 5: Appian will work together to enhance its effectiveness in implementing the Principles

Principle 6: Appian will each report on its activities and progress towards implementing the Principles

Appian is committed to incorporating environmental, social and governance standards across the whole investment lifecycle, from the initial desktop due diligence and subsequent investee company site visits, through to ongoing operational portfolio management and ultimate exit of that investment.

A significant part of Appian's due diligence process in relation to a potential portfolio company will focus on ESG issues relevant to that particular company, including in relation to its geographical location and local community. No two investments are the same, therefore the ESG matters to perform due diligence on will differ from target company to target company. If environmental, social or governance issues are identified during the due diligence phase that do not have appropriate / achievable risk management procedures in place in order to satisfactorily address and improve these matters, that acquisition would not proceed to completion as Appian would decline the investment.

ESG / SRI issues that could be relevant to any particular investment include:

 - Impact on local community of mine development

 - Relations with communities local to the mine development

 - Integration of local communities into the future mine development (through training or use of local suppliers for example)

 - Impact on local environment (local water supply or general environment for example) of mine development, and target company’s Environmental and Social Impact Assessment

 - Governmental stability

 - Potential for resource nationalism

 - Health and safety

 - Labour relations

 - Mine closure and land rehabilitation plan

 - Incumbent management team

 - Current Board structure and composition

 - Current management team background and ability

Appian believes that adhering to the highest environmental, social and governance standards benefits all stakeholders in the private equity domain; investors, portfolio company shareholders, management and employees, together with the local community to that portfolio company.

 

07.3. Additional information. [Optional]


PE 08. Types of ESG information considered in investment selection

8.1. Indicate what type of ESG information your organisation typically considers during your private equity investment selection process.

8.2. Describe how this information is reported to, considered and documented by the Investment Committee or similar.

All ESG matters are incorporated into a full Investment Committee deck which details, amongst other things, a project overview and thesis, key risks, deal structure and terms, together with a detailed project assessment, complied from various sources and internal analysis. In addition, an internal Technical Assessment is produced on each project.


PE 09. Encouraging improvements in investees (Private)


PE 10. ESG issues impact in selection process (Private)


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