ESG has been integrated into the "PSP Way", which is an effort to codify Paine Schwartz Partners' approach to delivering successful outcomes in investments and includes an aspiration for how portfolio companies operate, and how the Firm's various stakeholders work together to achieve common objectives. ESG is included in one of PSP's core “Principles for Success”, and as one of its “Portfolio Foundational Elements.” While each portfolio company will have its own unique agenda, the Portfolio Foundational Elements seek to promote execution of each of PSP’s core principles.
To ensure the integration of ESG considerations in the pre‐investment phase, and subject to the Firm's determination of what is reasonable and appropriate for each transaction, the Firm will undertake ESG due diligence screening to conduct an initial assessment of potentially material ESG risks and value creation opportunities that may have an impact on the investment decision‐making process. This screening is typically done in concert with a third‐party expert and the use of industry standards such as the Sustainability Accounting Standards Board (SASB). The Firm uses peer benchmarking, industry standards (e.g., SASB), and expert third-party judgement to identify material ESG focus areas for its portfolio companies. Over the years, the Firm has evaluated several such areas, including greenhouse gas (GHG) emissions, energy use, water, waste, fair labor practices, and others. When material ESG issues are identified, they will be included in discussions with the Investment Committee, and external advisors may be engaged to carry out additional ESG‐related due diligence as needed.