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Triton Investment Management Limited (TIML)

PRI reporting framework 2020

You are in Strategy and Governance » Investment policy

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.

Funds managed by Triton Investment Management Limited (the "Manager") seek the successful development of the businesses that they invest in and to be prudent stewards of investors' capital.

The key objectives of the RI Policy are:

  • to ensure it is a fundamental part of the investment decision making process and that all personnel are fully trained and cognisant of the policy;
  • to reduce risk and enhance value in investment portfolios through focused and consistent consideration and management of ESG issues;
  • to identify and manage ESG issues throughout the investment cycle: pre-investment, during ownership and at exit;
  • to implement effective governance structures, training programmes and communication procedures at the fund and portfolio company levels;
  • to strive for continuous improvement in relation to ESG issues; and
  • to communicate to the public, Triton's focus on ESG and build that into the firm's reputation.

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]

Triton's Responsible Investment ("RI") Policy sets out formalised guidelines on environmental, social and corporate governance factors. It was developed on the basis of the UN Global Compact Principles, the UN Guiding Principles on Business and Human Rights, the Universal Declaration of Human Rights, the International Labour Organisation Conventions and the OECD Guidelines for Multinational Enterprises.

When drafting the RI Policy Triton has also considered governance standards and guidance on management and reporting of corporate responsibility including: International Corporate Governance Network (“ICGN”) Guidelines on Corporate Governance, Anti-Corruption, Political Lobbying & Remuneration; The Global Reporting Initiative and International Organisation for Standardisation (“ISO”) 26000.

Funds managed by Triton Investment Management Limited (the “Manager”) seek the successful development of the businesses that they invest in and to be prudent stewards of investors' capital.

The key objectives of the RI Policy are:

  • to ensure it is a fundamental part of the investment decision making process and that all Triton and West Park personnel are fully trained and cognisant of the RI Policy;
  • to reduce risk and enhance value in investment portfolios through focused and consistent consideration and management of ESG issues;
  • to identify and manage ESG issues throughout the investment cycle: pre-investment, during ownership and at exit;
  • to implement effective governance structures, training programmes and communication procedures at the fund and portfolio company levels;
  • to strive for continuous improvement in relation to ESG issues; and
  • to communicate to the public Triton's focus on ESG and build that into the firm’s reputation.

01.6. Additional information [Optional].

          
        

SG 01 CC. Climate risk

01.6 CC. Indicate whether your organisation has identified transition and physical climate-related risks and opportunities and factored this into the investment strategies and products, within the organisation’s investment time horizon.

Describe the identified transition and physical climate-related risks and opportunities and how they have been factored into the investment strategies/products.

Triton invests in companies in the industrials, business services, consumer and health sectors. As such, some of the specific climate-related risks and opportunities we have identified include:

Physical risks

  • Increased frequency and severity of weather events could result in reduced production capacity and interruptions to supply chains

Transition risks

  • Increased pricing of GHG emissions could increase operating costs, particularly in our industrials companies
  • Substitution of existing products and services for 'greener' or lower-impact options could reduce revenue if our companies do not evolve; and
  • Lack of alignment between our companies' customers and the low carbon transition could a) impact our customers' long-term commercial viability, which would then b) reduce demand for our companies' products and services, particularly in our business services companies

Opportunities

  • Resource efficiency in areas such as energy and water reduces our companies' production costs
  • Promotion of circular economy practices can reduce costs and create competitive advantage, particularly in our consumer companies
  • Use of lower-emissions sources of energy and technology e.g. renewable energy, electric vehicles reduces exposure to increasing costs of carbon; and
  • Development of lower emission products and services can meet growing consumer and customer preferences, thus create competitive advantage and increase revenues

Consideration of climate-related risks and opportunities is embedded into Triton's wider ESG approach. Here, material ESG issues (including climate-related risks and opportunities where relevant) are evaluated pre-acquisition by the ESG team and external ESG due diligence providers where appropriate. This evaluation is included into  investment recommendations where appropriate. Where Triton has majority control of a company, it will launch and implement an ESG programme, including management of climate-related risks and opportunities. As part of the exit process, Triton includes an assessment of a company's exposure to transition risk as part of vendor due diligence where relevant. 

Triton's focus in 2019 has been to raise awareness of climate change and integrate its consideration more rigorously across our portfolio and investment processes. As part of this, Triton ran a dedicated session on climate-related risks and opportunities at its annual ESG Forum (which is attended by portfolio company representatives responsible for the ESG agenda). The ESG team also incorporated climate change into its training materials for personnel. It also supported each PC to conduct an assessment of relevant climate-related risks and opportunities and the extent to which these are currently being managed. 

01.7 CC. Indicate whether the organisation has assessed the likelihood and impact of these climate risks?

Describe the associated timescales linked to these risks and opportunities.

In 2019, Triton supported each PC to conduct an assessment of relevant climate-related risks and opportunities and the extent to which these are currently being managed. This included assessing the likelihood and impact of each risk and opportunity. Given the diversity of companies in Triton's portfolio, the timescales linked to these risks and opportunities vary. Some examples of risks and opportunities and associated timeframes are provided below:

 Current

  • Changes in precipitation patterns causing increased flood risk in manufacturing facilities
  • Increased severity of extreme weather events impacting a warehouse's ability to receive and deliver products
  • Increased costs of raw materials due to changes in energy input prices

Short term

  • Increased use of recycling through sale of reject material to other industries
  • Enhanced emissions and environmental reporting obligations
  • Rising temperatures resulting in higher labour costs due to need for more breaks in production

Medium term

  • Increased costs of transitioning fleet and upgrading site infrastructure to support electric vehicles
  • Potential mandates on and regulation of existing products and services, particularly in industrials companies
  • Increased use of recycling from scrap material in the production process

Long term

  • Potential shift towards decentralised energy generation reducing demand for certain product lines
  • Increased supplier costs passed onto business arising from climate-related disruption and investment in resilience
  • Increased costs of transitioning service offering to customers operating greener business models

01.8 CC. Indicate whether the organisation publicly supports the TCFD?

01.9 CC. Indicate whether there is an organisation-wide strategy in place to identify and manage material climate-related risks and opportunities.

Describe

Triton's strategy considers climate-related risks and opportunities as part of our wider ESG approach. Here, material ESG issues (including climate-related risks and opportunities where relevant) are evaluated pre-acquisition by our ESG team and external ESG due diligence providers where appropriate. This evaluation is included into the investment recommendations. Where we have majority control of a company, we will launch and implement an ESG programme, including management of climate-related risks and opportunities. As part of our exit process, we have recently begun to include an assessment of a company's exposure to transition risk as part of vendor due diligence where relevant.

A key focus for 2020 will be to follow up on the PC climate-related risk and opportunity assessments. This will include:

  • requiring PCs to get their assessment reviewed at Board;
  • consolidating the company assessments at a portfolio-level to identify potential hotspots of risk or opportunity; and
  • repeating a TCFD analysis of Triton's internal processes to identify improvements made and ongoing gaps in management.   

1.10 CC. Indicate the documents and/or communications the organisation uses to publish TCFD disclosures.


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.

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

02.3. Additional information [Optional].

Triton formally adopted a RI Policy on 3rd May 2012.  The key aims of the policy are:

  • to ensure it is a fundamental part of the investment decision making process and that all Triton and West Park personnel are fully trained and cognisant of the policy;

  • to reduce risk and enhance value in investment portfolios through focused and consistent consideration and management of ESG issues;

  • to identify and manage ESG issues throughout the investment cycle: pre-investment, during ownership and at exit;

  • to implement effective governance structures, training programmes and communication procedures at the fund and portfolio company levels;

  • to strive for continuous improvement in relation to ESG issues; and

  • to communicate to the public, Triton's focus on ESG and build that into the firm’s reputation.

Funds managed by the Manager strive for the successful development of the businesses that they invest with and to be prudent stewards of investors' capital. The RI policy was written and implemented in 2012 and was last reviewed in 2019. An updated version was launched in 2020. The policy will continue to be reviewed on an annual basis going forward.

Triton’s RI strategy has 4 pillars as below.

  1. Sensitise / train all relevant personnel. Triton implemented the training programme in 2013 and will continue to schedule mandatory ESG training sessions for all relevant Triton and West Park employees.

  2. Ensure the consideration of ESG aspects throughout the due diligence process for prospective investment opportunities.

  3. Work directly with portfolio companies in implementing the RI Policy and coordinating reporting on ESG performance. The ESG programme has been fully rolled out to all portfolio companies with the exception of those most recently acquired where integration is ongoing as part of the 100-day plan.

  4. Benchmark and report on Triton ESG performance, using both public information (including, but not only, from United Nations Principles for Responsible Investing (“UN PRI”)) and information from investee companies. Triton has filed publicly available UN PRI Transparency Reports since 2014 to increase transparency and facilitate efficient benchmarking. Portfolio companies started formal ESG reporting to Triton in Q1 2016, and now report on a bi-annual basis.

The RI Policy of Triton and TAS was developed in alignment with the requirements of the UN Global Compact's ten principles in the areas of human rights, labour, the environment and anti-corruption, the Universal Declaration of Human Rights of the United Nations as well as the OECD guidelines for Multinational Enterprises.

Responsibility for day to day implementation of the Responsible Investment (RI) policy has been delegated to the Head of ESG and the Legal Counsel Portfolio Governance. 


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.

Triton has adopted Allocation Guidelines that regulates how investments are allocated between relevant Triton Funds where necessary to manage conflicts in a fair and transparent manner. Under the constitutional documentation of the relevant Triton Funds, there are provisions for consultation with and/or approval by relevant Advisory Boards on matters giving rise to potential or actual conflicts of interest. In addition, all Triton executives and non-executive directors are required to declare any interests that may conflict with the interests of Triton and Triton Funds.

03.3. Additional information. [Optional]


SG 04. Identifying incidents occurring within portfolios (Private)


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