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Foresight Group LLP

PRI reporting framework 2020

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Post-investment (monitoring and active ownership)

Overview

INF 11. ESG issues in post-investment activities

11.1. Indicate whether your organisation and/or operators consider ESG issues in post-investment activities relating to your infrastructure assets.

11.2. Indicate how your organisation, and/or operators, considers ESG issues in the following post-investment activities relating to your infrastructure assets.

          Reporting
        

11.3. Describe how your organisation, and/or operators, considers ESG issues in post-investment activities related to your infrastructure investments. [Optional]

ESG monitoring and optimisation of our investments is continuous throughout their life. Foresight's Investment and Asset Management teams and Environment and Sustainability Manager work closely with all operators to ensure the sites are being operated to the highest possible standards, with Health and Safety (H&S), environmental performance and regulatory adherence all being of paramount importance. The assets operate in accordance with their permits and planning permissions, all of which require the highest standards of operation to be adhered to. As part of this, the Health and Safety Executive (HSE), Environment Agency (EA) (or local equivalents for non-UK based investments) and the local Council are all entitled to visit at any time.

ESG monitoring processes begin with regular site visits, which are conducted by members of Foresight's Asset Management team and frequently include Board representatives. These visits ensure the asset's day-to-day performance and ESG performance are as expected and simultaneously help to prepare the asset for the third party Environmental, Governance and H&S audits that Foresight contracts annually. The audits produce recommendations, which are subsequently assigned to designated responsible individuals, who are held accountable for ensuring these recommendations are actioned. Mercatus, an asset management software system used by Foresight, enables the tracking of all operational and financial KPIs as well as live tracking of 'incidents', including H&S, operational performance, ESG, insurance and contractual management. This is a cyclical process that supports continual optimisation of the asset across all areas, inclusive of ESG performance. Depending on the requirement, Mercatus can deliver either a high degree of granularity on individual assets or an aggregated snapshot of the portfolio's performance as a whole.

All audit results, alongside any shortfalls and recommendations are included on the agenda of the investment’s board meetings with H&S constituting the first items for discussion in all cases.

Data is captured in a number of different areas. The data collected during the third party audits provide results concerning H&S performance and adherence to ESG related regulations. To develop targets, these are then compared against industry standards and best practice. While Foresight's assets generally outperform  industry standards, areas in which they do not are immediately focused on for improvement. Targets are set in order to ensure these improvements are made and designated individuals will be accountable for their delivery.

The KPIs used during pre-investment as part of the Sustainability Evaluation Criteria scoring system are re-calculated on an annual basis as a means of monitoring the ESG performance of an asset. Any decline in scores is reviewed and remedial measures implemented in order to bring the asset's overall ESG performance either equal to or above the minimum threshold and, at the very least, in line with the pre-investment scoring.

It is also worth noting that certain data is collected for aggregation purposes so as to be able to assess the Asset Portfolio's overall ESG performance and enable concise reporting of this information to investors and regulators.


Infrastructure Monitoring and Operations

INF 12. Proportion of assets with ESG performance targets

12.1. Indicate the proportion of infrastructure assets for which your organisation and/or operators included ESG performance in investment monitoring during the reporting year.

 (in terms of number of infrastructure assets)

12.2. Indicate ESG issues for which your organisation, and/or operators, typically sets and monitors targets (KPIs or similar) and provide examples per issue.

List up to three example targets per issue

          Plant emissions in relation to environmental permits, including COX and NOX
        
          Reduction in waste diverted to landfill, measured in tonnes of waste
        
          CO2 emissions saved by an individual asset or across a portfolio
        

List up to three example targets per issue

          Job creation – measured in full time employment
        
          Quality of local environment – preserving or improving quality
        
          Odour complaints from local communities – proactively responding and reducing odour impact
        

List up to three example targets per issue

          Anti-Money Laundering and Anti-Bribery and Corruption checks conducted
        
          Non-discrimination policies in place
        
          Board representation – enforcing responsible ownership and management
        

12.3. Additional information. [Optional]


INF 13. Proportion of portfolio companies with ESG/sustainability policy

13.1. Indicate whether you track the proportion of your infrastructure investees that have an ESG/sustainability-related policy (or similar guidelines).

13.2. Indicate the proportion of your infrastructure investees that have an ESG/sustainability-related policy (or similar guidelines).

(in terms of number of infrastructure investees)

13.3. Describe how your organisation, and/or your operators, contribute to the infrastructure investees’ management of ESG issues. [Optional]

Foresight contributes to the Management of ESG issues within investee companies through two primary means:

Board representation.  Foresight normally has an allocated seat on the board or in some cases has a carefully managed relationship with someone that is able to represent Foresight’s views in the decision making process. Such representation by Foresight is an essential part of being able to drive and effect change within an investee company, including maintaining a strong focus on ESG issues. Foresight ensures that it participates in all stipulated meetings and attempts to ensure that the Board acts as a cohesive unit. A track record of active asset ownership and management gives Foresight a high degree of credibility, which affords us considerable influence. We use this influence responsibly to focus the Board on its key roles, namely: setting the strategy for growth; creating value; ensuring consideration of ESG issues; managing risks; monitoring the business; safeguarding reputation. Foresight will always try and ensure that the Board has the correct composition, with a tailored mix of skills and experience to meet the needs of the company.

Active asset management.  Foresight’s approach to active asset management ensures there is a member of the Foresight team with direct responsibility for the management of day-to-day operations at the asset level, enabled by 24/7 real-time monitoring of operational performance.  As such, a key aspect of the portfolio management team’s responsibilities includes continuous monitoring of ESG issues, whilst simultaneously  ensuring the investee company is exploiting opportunities to apply ESG focused practices that may lead to enhanced operational performance.  Maintaining this approach across the broader infrastructure portfolio enables ESG best-practice and lessons identified to be shared easily between portfolio managers, enabling swifter implementation at the investee company level.  This can range from adaptation of policies and management systems, to the application of new operational procedures.

 


INF 14. Type and frequency of reports received from investees (Private)


Infrastructure Maintenance

INF 15. Proportion of maintenance projects where ESG issues were considered

15.1. Indicate the proportion of active infrastructure maintenance projects where ESG issues have been considered.

(in terms of number of active maintenance projects)

15.2. Describe your approach to ESG considerations for infrastructure maintenance projects. [Optional]

Once operational, all projects include elements of maintenance.

Foresight employs carefully selected Operations and Maintenance specialist contractors, often under long-term service cover that is set against meeting specified targets. The staff employed are experienced, multi-skilled and include qualified engineers with good track records, certified in areas of Health and Safety. Furthermore, their on-site activity is governed by a robust set of enforceable Site Rules, which put in place distinct procedures around site-access and operations.  These are tailored to the individual asset, which represents the first step to ensuring that it is correctly managed. The Site Rules clearly stipulate the ESG working practices and procedures that are to be adhered to at all times by employees and visitors alike.

Alongside this, Foresight appoints an experienced in-house operations manager to oversee the project in the post-investment stage, who is capable of ensuring that ESG considerations during maintenance operations are both met and recorded. Independent advisors and auditors (as described in question Inf 11.3) are similarly used to ensure that assets are compliant to the latest policy standards and operating in the most environmentally friendly way.

Finally, Foresight seeks to ensure that it has representation on the Board. Whether this is having an allocated seat on the Board itself or a carefully managed relationship with someone that is able to represent Foresight’s views in the decision making process. Representation gives Foresight a voice and is an essential part of being able to effect change within any equity vehicle. Foresight ensures that it participates in all stipulated meetings and attempts to ensure that the Board acts as a cohesive unit. A track record of active asset ownership and management gives Foresight a high degree of credibility, which affords us considerable influence. We use this influence responsibly to focus the Board on its key roles, namely: Setting the strategy for growth; creating value; managing risks; monitoring the business; safeguarding reputation. Foresight will always try and ensure that the Board has the correct composition, with a tailored mix of skills and experience to meet the needs of the company.


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