GBL has an engaged ownership approach in the companies in which it invests and ensures through a direct engagement with their governance bodies that they are managed in a manner consistent with its responsible management philosophy, including its Code of Ethics and its ESG Statement.
Each portfolio company remains responsible for developing its own ESG policies, programs and key performance measures. This is monitored by GBL’s investment team as part of the asset rotation guidelines. GBL believes, however, that it is necessary to promote common guidelines on responsible management within its various shareholdings.
In case of an incident arising at the level of a portfolio company and being reported to GBL through its governance bodies, monitoring would be ensured by GBL’s representative(s) within the relevant governance body, with the assistance of the relevant advisers. Any significant incident would be discussed, reviewed and monitored by the relevant reporting levels at GBL (including the CEO, the Chief Legal Officer and the Head of Investments). This escalation process was followed for the Syrian case which arose in 2016 in relation to LafargeHolcim.
In order to monitor appropriately its portfolio from an ESG perspective, GBL conducts on a yearly basis an in-depth risk assessment focusing on its portfolio companies.
This risk assessment has been structured by GBL to combine information from third-party ESG-rating reports and market data with proprietary data derived from (i) GBL’s in-house Compliance questionnaire (see below for covered areas) and (ii) the knowledge and expertise of GBL’s investment team on the portfolio companies and, more generally, their sectors.
On that basis, GBL’s ESG risk assessment does cover a wide scope of ESG factors including:
- from an environmental perspective: Resource efficiency, pollution prevention and management, ecosystems and biodiversity, climate change, environmental supplier and procurement standards, environmental product responsibility, etc;
- from a social and governance perspective: Labor rights and working conditions, human rights and livelihoods, social supplier and procurement standards, business ethics and governance, customer and product responsibility, etc.
This assessment aims at identifying, for each portfolio company, its key ESG risks, and, if assessed as material, (i) translating them into potential adjustments to the investment theses, (ii) reporting them to GBL’s Audit Committee and ultimately to GBL’s Board of Directors, and (iii) ensuring their monitoring by GBL’s representatives through the governance bodies of the portfolio companies.