Each ACM deal team will seek to identify any ESG risks and the deal team’s assessment of their materiality and prospects for improvement, including the following:
• Where an alternative source of capital is used by a potential investee company to negotiate against integrating ESG goals in the investment, this fact shall be included in the assessment;
• Particularly for companies located in challenging operating environments, an assessment of the portfolio company’s governance structures and the capacity of these structures in the areas of compliance, audit, risk management and potential conflicts of interest;
• Whether the portfolio company’s compensation and other policies align the interests of owners and management;
• An assessment of a portfolio company’s compliance with internationally recognized labor rights; and
• For companies operating in sectors that raise heightened risks of adverse environmental or other ESG impacts (for example, companies with activities that increase net GHG emissions), an assessment by the deal team, working with ASG, of the company’s operations as measured against appropriate performance standards or best practices (such as the IFC Performance Standards) for companies operating in such sectors, with the selection and application of such standards to be determined by the Investment Committee.