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Adelphi Capital LLP

PRI reporting framework 2020

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Investment policy

SG 01. RI policy and coverage

New selection options have been added to this indicator. Please review your prefilled responses carefully.

01.1. Indicate if you have an investment policy that covers your responsible investment approach.

01.2. Indicate the components/types and coverage of your policy.

Select all that apply

Policy components/types

Coverage by AUM

01.3. Indicate if the investment policy covers any of the following

01.4. Describe your organisation’s investment principles and overall investment strategy, interpretation of fiduciary (or equivalent) duties,and how they consider ESG factors and real economy impact.

Adelphi invests in long and short positions in mid to large-cap listed European equities. We aim to achieve above-average returns with below average volatility. Our core investment principles include: 

  1. We have a fidiciary duty to be responsible investors and to create long term shareholder value for our underlying clients. This involves monitoring ESG factors within our investee companies and taking action where we believe it necessary (e.g. calling out poor ESG practises relative to peers).

  2. Stock selection should be the primary driver of our returns. Our portfolios undergo continual analyst and PM review to ensure they continue to meet with our investment criteria.

  3. We invest exclusively in Europe and avoid stocks that have no connection to our region. 

  4. Good company management is a key driver of value creation in a business. We look for senior managers who treat each shareholder equally to create value over the long term. 

  5. Where a sector is incompatible with our ESG beliefs we will avoid that sector or, in extreme cases, screen that sector out completely (e.g. Cluster Munitons).

  6. We employ robust, real-time risk management. We utilise our balance sheet to reflect conviction level and can use market hedging when appropriate

01.5. Provide a brief description of the key elements, any variations or exceptions to your investment policy that covers your responsible investment approach. [Optional]

The purpose of Adelphi's 'Responsible Asset Ownership Policy' is to set out basic principles and minimum standards to guide employees in the conduct of their day-to-day activities. This policy is intended to promote and enhance our culture of responsible investing within the framework of ESG considerations.

The Aim of the Policy 

The Firm aims to act consistently in the best interests of its investors and other stakeholders, and believes that ESG issues are highly relevant to the European markets in which we invest and can potentially impact the long-term investment returns of our client portfolios. By incorporating ESG factors into our policies and procedures, at Adelphi and within investee companies, we can better identify both potential sources of risk, and opportunities to add value for clients. This section addresses our approach. We have not adopted a rules-based process whereby we set explicit boundaries for areas in which we will invest or issues and behaviours that we will avoid. Nor will we explicitly restrict our universe of companies.  Instead we will seek to encourage improvement in the companies that we do own.

Principles

Adelphi follows the following principles to provide direction for responsible investment efforts:

  • Incorporating ESG considerations into investment analysis and decision-making processes.
  • Being an active owner and incorporating ESG issues into ownership policies and practices.
  • Seeking appropriate / relevant disclosure on ESG issues by the entities in which we invest.
  • Reporting on our activities and progress towards implementing the Principles to UN PRI.

Firm-wide ESG considerations

The Firm's policy also outlines how we implement ESG at a management company level. This includes:

  • Reporting, disclosure and communications to UN PRI and our clients.
  • The Firm's zero-tolerance approach to slavery and human trafficking within our business. 
  • Our approach to carbon offsetting. 
  • Service provider due diligence.  
  • Firm-wide ESG training.

Reporting

Our ESG analysis and interactions with management are documented internally.  In addition, the following information will be made available to our clients:

  • We will report to UN PRI.
  • Investor Relations may report on the implementation of our policy to our clients
  • We may include ESG examples in our presentations, firm DDQ and website
  • We will update our policy accordingly as we develop and refine our process

Integrating ESG into our investment process 

The Firm’s primary objective is to deliver returns to its clients in line with its investment policies. The Firm seeks to create sustainable value for clients and portfolio company employees, customers and other stakeholders. With this objective in mind, it seeks to improve the management and performance of its investee companies including in relation to ESG issues. A part of this process is ensuring that companies manage all relevant ESG risks effectively and seeking to maximise value from ESG opportunities. Key parts of this process include: 

  • When reviewing potential investments, the Firm will consider relevant ESG issues associated with those opportunities and carrying out appropriate due diligence as part of its pre-investment process.
  • For reasons of good governance the Firm will pay particular attention to companies that operate, or have plans to operate in, difficult operating environments, e.g. countries where governance is known to be weak, corruption prevalent, and regulation and enforcement of environmental and social issues poor.
  • ESG issues will be addressed on an ongoing basis post-investment through setting an ESG policy at asset level monitoring compliance with such policy and supporting the governance and management systems that are put in place.

Active Ownership

We regard strong management ethics and good corporate governance as a pre-requisite for investing in any company and have a long history of voting on corporate actions and direct engagement with boards in situations where we believe they are not acting responsibly.  

We are long term shareholders and central to our investment philosophy is the concept of responsible ownership.

  • As responsible asset owners we have been signatories of the UK Stewardship Code since its inception in 2010
  • We joined the UK Investor Forum in 2018, in order to collaborate with likeminded investors on corporate governance issues
  • We have engaged with ISS Governance to proxy vote on behalf of our clients. From April 2019 all proxy voting decisions have included consideration of ESG factors.

Repsonsibility and Governance 

The Firm has developed policy, procedures and programmes to assist the analysis, monitoring and development of relevant ESG considerations throughout its investment process. We seek to monitor our portfolio exposure to key ESG issues through weekly, annual and ad-hoc meetings, as well as actively managing all such risks and opportunities as part of our risk management function. The Firm’s founders are responsible for the implementation of the RI policy and ensuring that ESG factors are incorporated into investment decisions. Analysis, monitoring and engagement is undertaken by the existing investment team, with assistance from the risk management group.  Progress is monitored over time by the Partnership Committee.

 

 

01.6. Additional information [Optional].

SG 01 CC. Climate risk (Private)

SG 02. Publicly available RI policy or guidance documents

 

02.1. Indicate which of your investment policy documents (if any) are publicly available. Provide a URL and an attachment of the document.

URL/Attachment

Attachment

Adelphi Responsible Investment Policy - 2020.pdf

URL/Attachment

URL http://www.adelphi-europe.com

Attachment

Adelphi - UK Stewardship Code Disclosure April 2020.pdf

URL/Attachment

URL http://www.adelphi-europe.com

02.2. Indicate if any of your investment policy components are publicly available. Provide URL and an attachment of the document.

URL/Attachment

File Attachment

URL/Attachment

File Attachment

URL/Attachment

File Attachment

URL/Attachment

File Attachment

URL/Attachment

File Attachment

URL/Attachment

URL http://www.adelphi-europe.com

File Attachment

02.3. Additional information [Optional].

Please refer to Adelphi's Responsible Investment Policy for all the above. 

SG 03. Conflicts of interest

03.1. Indicate if your organisation has a policy on managing potential conflicts of interest in the investment process.

03.2. Describe your policy on managing potential conflicts of interest in the investment process.

Senior management identify and document on an ad hoc basis (and at least annually) the key conflicts and potential conflicts we face in our day to day business and document these in a Conflicts Inventory.  The inventory additionally summarises the means by which we manage these conflicts.

For the purposes of identifying the types of conflict and potential conflicts that arise we take into account (amongst other things) whether the firm or a relevant person, or a person directly or indirectly linked by control to the firm is likely to make a financial gain, or avoid a financial loss, at the expense of our clients or if they have an interest in the outcome of a service provided to our clients or transaction carried out on behalf of our clients, which is distinct from our clients' interest in that outcome.

We have a strict Personal Account Dealing policy which prohibits Adelphi staff from dealing in any securities that our portfolios might deal in.

We also utitlise a third party (ISS Governance) to proxy vote on corporate actions on behalf of our client portfolios. This ensures that potential voting conflicts are mitigated.

03.3. Additional information. [Optional]

SG 04. Identifying incidents occurring within portfolios (Private)

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