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TowerBrook Capital Partners

PRI reporting framework 2019

You are in Strategy and Governance » Governance and human resources

Governance and human resources

SG 07. RI roles and responsibilities

07.1. Indicate the internal and/or external roles used by your organisation, and indicate for each whether they have oversight and/or implementation responsibilities for responsible investment.

Roles

Select from the below internal roles

          CFO; COO; CCO; General Counsels
        

Other description (1)

          Responsible Ownership Committee
        

07.2. For the roles for which you have RI oversight/accountability or implementation responsibilities, indicate how you execute these responsibilities.

The Firm's Management Committee formally considers Responsible Ownership and ESG-related issues on an annual basis.

TowerBrook has formed a Responsible Ownership Committee, composed of senior TowerBrook professionals, including the firm's co-CEOs, to direct the responsible ownership program, including the adoption, implementation and monitoring of policies and procedures to ensure that TowerBrook and its portfolio companies' businesses are conducted in a responsible manner. The Responsible Ownership Committee meets at least quarterly.

Within TowerBrook, the Portfolio Group and Legal Team monitor relevant matters within the portfolio on an ongoing basis as applicable. ESG matters are included in 200 day plans, with any particular issues requiring attention being highlighted and prioritized.  The Portfolio Group encourages companies to address relevant ESG matters, such as supply chain risks for apparel companies and environmental and safety for manufacturing companies.   ESG is a standard item for consideration at TowerBrook's monthly portfolio committee meetings, at which TowerBrook addresses current important considerations. 

TowerBrook deal teams actively monitor ESG at the portfolio company level for our controlled portfolio companies, ensuring that systems and resources are in place to enable ESG risks to be effectively managed and that each portfolio company assigns specific management responsibility for ESG operations. As part of its general ESG oversight, TowerBrook would review existing compliance with sustainability, and ethical business guidelines, as appropriate, and would encourage portfolio company management to introduce new guidelines if we deemed this necessary. TowerBrook seeks to ensure that each controlled portfolio company has established a dedicated board Committee (for example ESG or CRS), or modified an existing governance committee, to (a) establish a corresponding charter that is bespoke to the language, culture and business of each company, (b) review the company's significant strategies, activities and policies regarding ESG (including labor practices) and community impact and charitable activities, and (c) make recommendations to the Board that focus on maximizing long-term, sustainable value creation.

07.3. Indicate the number of dedicated responsible investment staff your organisation has.

0 Number

07.4. Additional information. [Optional]

Responsible ownership considerations are integrated into every stage of our investment process and drive the development of policies, action plans and metrics for our portfolio companies. 

Overview

TowerBrook has a clear and consistent process that helps us scrutinise prospective investments, manage them responsibly and deliver sustainable results for our investors. Responsible ownership considerations are integrated into every stage of this process, and drive the development of policies, action plans and metrics for our portfolio companies. 

Initial Screening

TowerBrook seeks to conduct robust reviews of potential ESG risks early in the investment process.  TowerBrook has drafted and continuously evolves a list of ESG Markers, including, but not limited to, certain industries or countries that present heightened ESG risk and investor sensitivities.  Investment professionals reviewing potential opportunities in such industries or connected to such countries, or which otherwise could reasonably pose material ESG risks, must discuss any such issues with TowerBrook’s Transaction Committee at an early stage in the investment consideration process.   TowerBrook also seeks to engage with its preferred ESG consultants at an early stage in the investment consideration process to identify ESG-related risks and opportunities. 

Due Diligence

Once an early stage investment proceeds to due diligence, TowerBrook conducts ESG-related diligence targeted to the Company’s industry and specific risk profile.  TowerBrook has developed a standard ESG diligence request list to confirm a target company’s level of compliance with TowerBrook’s ESG policies and relevant legislation and regulation.  Additionally, TowerBrook has developed a specific detailed ESG diligence request list for certain industries, such as consumer goods and manufacturing.  TowerBrook’s investment team members may also conduct site visits, as appropriate.   TowerBrook’s preferred ESG consultants would be retained during the diligence stage to conduct a fulsome ESG diligence review. 

TowerBrook’s due diligence processes are designed to ensure that material issues, including ESG, are addressed when considering and evaluating investment opportunities.  TowerBrook seeks to undertake ESG due diligence on applicable private equity investments, including, but not limited to, those with industrial manufacturing capabilities. Environmental diligence typically comprises environmental Phase I site assessments, but this can be extended to include Phase II site assessment if necessary.  TowerBrook may also conduct diligence on anti-corruption, data privacy, supply chain, safety and other governance matters, as appropriate.   TowerBrook’s due diligence process for structured opportunities investments may also take into account ESG considerations, as appropriate.  During diligence, TowerBrook also extensively references key executives and non-executives affiliated with the company, testing among other things for integrity and ethical reputation to help shape our view of the broader company’s culture and attitudes.

Transaction Closing

At signing, TowerBrook’s legal team would consider whether to include detailed ESG clauses in  investment or shareholders’ agreements, as practicable and applicable.  The legal team and investment teams also work to verify due diligence findings via representations and warranties in the purchase agreement and seek specific indemnification as appropriate. 

200-Day Plan

The 200-day plan for each portfolio company includes development and publication of an appropriate ESG policy and development of procedures to implement, monitor and test such policy.  Each 200-day plan includes standard ESG items, as well as any specific ESG items identified during diligence as relevant for a particular target company.  Individual portfolio company action plans are designed, where appropriate, to address any opportunities for improvement. 

Ownership

During ownership, ESG related risks are managed by the boards and management teams of the individual portfolio companies.  Since TowerBrook invests in a wide range of sectors, ESG risks vary widely from company to company. In connection with its recent enhancement of Responsible Ownership policies, TowerBrook now seeks to discuss the importance of ESG with each CEO of private equity portfolio companies, together with the Chair, who would have been separately instructed during onboarding with a Welcome Pack that explicitly addresses Responsible Ownership and the Chair’s role therein.  TowerBrook intends to actively monitor ESG at the portfolio company level, ensuring that systems and resources are in place to enable ESG risks to be effectively managed and that each portfolio company assigns specific management responsibility for ESG operations.  TowerBrook’s approach to ESG has been to ask each portfolio company’s Audit & Risk Management Committee to review regularly such ESG risks as are relevant to that company.  This practice is now evolving to establish a dedicated ESG (or similar) committee on each portfolio board.  Portfolio company management is encouraged to engage directly with third parties (such as suppliers, developers, and contractors) to verify sound ESG practices.  Furthermore, TowerBrook seeks to ensure adequate training on ESG at the portfolio company level, which may include sensitivity/diversity training and supply chain management training. 

Exit

Responsible Investment and ownership considerations are also addressed in connection with exit, as appropriate.Any ESG issues would be addressed specifically pre-exit, or fully disclosed to a prospective purchaser, so that prospective buyers cannot use ESG factors to impose discounts due to lack of evidence that issues have been addressed.  TowerBrook would also highlight ESG actions as selling points where applicable (for example, a “great ESG story to tell”).   Transparency about what remains to be done, as well as about what has been done, is important in building trust and establishing an appropriate valuation.  

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SG 07 CC. Climate-issues roles and responsibilities

07.5 CC. Indicate the roles in the organisation that have oversight, accountability and/or management responsibilities for climate-related issues.

Board members or trustees

Chief Executive Officer (CEO), Chief Investment Officer (CIO), Chief Risk Officer (CRO), Investment Committee

Other Chief-level staff or head of department

Portfolio managers

Investment analysts

Investor relations

External managers or service providers

Other role, specify (1)

Other description (1)

          Responsible Ownership Committee
        

07.6 CC. For board level roles for which have climate-related issues oversight/accountability or implementation responsibilities, indicate how these responsibilities are executed.

The Firm’s Management Committee formally considers ESG-related issues on an annual basis, which include climate-related issues. 

07.7 CC. For the management-level roles that assess and manage climate-related issues, provide further information on the structure and process involved.

Our deal teams and deal team leads are responsible for identifying, in cooperation with the portfolio company, any potential climate-related issues.  TowerBrook seeks to conduct robust reviews of potential climate-related issues early in the investment process.  Investment professionals reviewing potential opportunities which present climate-related issues, or which impact industries which could reasonably present climate-related issues, must discuss any such issues with TowerBrook's Transaction Committee at an early stage in the investment consideration process. Materiality of climate-related issues are evaluated on a case-by-case basis. TowerBrook also seeks to engage with its preferred ESG consultants at an early stage in the investment consideration process to identify climate-related risks and opportunities.  Teams also partner with the relevant portfolio companies to resolve any given climate-related issues and escalate to the executive team where needed.


SG 08. RI in performance management, reward and/or personal development

08.1. Indicate if your organisation’s performance management, reward and/or personal development processes have a responsible investment element.

Board members/Board of trustees

08.1b. RI in personal development and/or training plan

Chief Executive Officer (CEO), Chief Investment Officer (CIO), Chief Operating Officer (COO), Investment Committee

08.1a. RI in objectives, appraisal and/or reward

08.1b. RI in personal development and/or training plan

Other C-level staff or head of department

          CFO; COO; CCO; General Counsels
        

08.1a. RI in objectives, appraisal and/or reward

08.1b. RI in personal development and/or training plan

Portfolio managers

08.1a. RI in objectives, appraisal and/or reward

08.1b. RI in personal development and/or training plan

Investment analysts

08.1a. RI in objectives, appraisal and/or reward

08.1b. RI in personal development and/or training plan

Investor relations

08.1a. RI in objectives, appraisal and/or reward

08.1b. RI in personal development and/or training plan

Other role (1) [from SG 07]

          Responsible Ownership Committee
        

08.1a. RI in objectives, appraisal and/or reward

08.1b. RI in personal development and/or training plan

08.3. Provide any additional information on your organisation’s performance management, reward and/or personal development processes in relation to responsible investment.

TowerBrook team members participate in a 360 review process annually.  ESG considerations are explicitly incorporated into the 360 review questions, as appropriate for each role. For example, team members will be reviewed on the following attributes:

▪ Acts as a leader in promoting Responsible Ownership values and proactively seeks out opportunities to enhance TowerBrook's Responsible Ownership initiative

▪ Proactively seeks out ways to improve efficiency, including resource efficiency (e.g. checking for and taking opportunities to pool transport where appropriate)

▪ Continuously seeks more efficient, secure, and cost-effective solutions

▪ Proactively seeks to address ESG risks and opportunities in deal structuring, negotiations and transactional documentation

▪ Acts as a leader in developing Responsible Ownership policies, guidelines, processes and controls, and guides investment teams on implementation


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