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Triton Investment Management Limited (TIML)

PRI reporting framework 2020

You are in Direct – Private Equity » Pre-investment (selection)

Pre-investment (selection)

PE 05. Incorporating ESG issues when selecting investments

05.1. During due-diligence indicate if your organisation typically incorporates ESG issues when selecting private equity investments.

05.2. Describe your organisation`s approach to incorporating ESG issues in private equity investment selection.

Triton’s RI Policy requires all potential investments to be reviewed for ESG risks and opportunities on a "company by company" basis.

ESG due diligence commences with an initial evaluation undertaken by the Investment Team and the ESG Team on the ESG risks and opportunities within the industry and geographic area. This includes conducting online screening using RepRisk and Exiger which identify and quantify a target’s exposure to ESG issues, business conduct and compliance risks. This assessment is also cross-checked using external benchmarks such as the SASB Materiality Map and EBRD Environmental and Social Risk Categorisation List. Publicly available information on the target company and any potential partners is also reviewed at this stage, where appropriate.

Following this initial stage, the ESG Team will take a proportionate approach to the next stage of due diligence depending on the nature of risks identified. In certain “low concern” situations, further desk-based research (e.g. media searches or consultation with relevant civil society and regulatory organisations) may be performed in-house or commissioned from a specialist ESG service provider.

However, in the majority of situations, independent due diligence is commissioned on the target’s management of material ESG issues, the scope of which could include, but is not limited to the following factors:

  • Environment - Energy efficiency, climate change, waste reduction, recycling, environmental impact, site pollution and sustainability.
  • Society - Community investment, stakeholder dialogue, inclusion, public perception, social mobility and human rights compliance.
  • Corporate Governance - Code of ethics, processes and procedures, reporting, transparency, anti-corruption policy and practice, stakeholder interests, accountability, data protection and documentation retention.
  • Human Capital - Staff turnover, health and safety, training and development, absence rate, performance management, equality and diversity and recruitment and retention.
  • Customer Relations - Customer satisfaction, retention and loyalty, reputation, trust, quality of service and product and competitive positioning.

Furthermore, the ESG Team will also conduct site visits during the due diligence process where applicable.

This outcomes of ESG due diligence, including key ESG risks and opportunities, are raised by the Investment Team, as appropriate, after discussion with the ESG Team, at the level of the Investment Advisory Committee (“IAC”) and the board of the Manager.

In 2015, Triton implemented a “Transaction Checklist” for all potential acquisitions. This covers commercial, legal, compliance, communication, ESG and other areas. Prior to signing any acquisition, sign-off by the Head of ESG and Legal Counsel Portfolio Governance on the Transaction Checklist is required to confirm that appropriate ESG due diligence has been conducted.

 

 

 

05.3. Additional information. [Optional]


PE 06. Types of ESG information considered in investment selection

06.1. Indicate what type of ESG information your organisation typically considers during your private equity investment selection process.

06.2. Describe how this information is reported to, considered and documented by the Investment Committee or similar.

Triton sets out, where appropriate, ESG factors in its investment recommendation documentation. The ESG Team may attend Investment Advisory Committees to discuss ESG issues. If an issue is identified, the ESG Team ensure that the deal team includes the issue in formal Investment Advisory Committee documentation. This includes input into investor ESG issues that may arise from commitments given in the Private Placement Memorandum or side letters.


PE 07. Encouraging improvements in investees (Private)


PE 08. ESG issues impact in selection process (Private)


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