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.

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. 

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

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.   

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.