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.
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.
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.
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.