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TowerBrook Capital Partners

PRI reporting framework 2020

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

投資前(投資対象の選定)

PE 05. Incorporating ESG issues when selecting investments

05.1. デューデリジェンスで組織がプライベートエクイティ投資先を選定する際、通常ESG問題を組み入れているかどうかを記載してください。

05.2. ESG問題をプライベートエクイティ投資の選定に組み入れる際のアプローチを説明してください。

Responsible ownership considerations are integrated into every stage of our investment process and drive the development of policies, action plans and metrics for our portfolio companies. 

Overview

TowerBrook has a clear and consistent process that helps us scrutinise prospective investments, manage them responsibly and deliver sustainable results for our investors. Responsible ownership considerations are integrated into every stage of this process, and drive the development of policies, action plans and metrics for our portfolio companies. 

Initial Screening

TowerBrook seeks to conduct robust reviews of potential ESG risks early in the investment process. TowerBrook has drafted and continuously evolves a list of ESG Markers, including, but not limited to, certain industries or countries that present heightened ESG risk and investor sensitivities. Investment professionals reviewing potential opportunities in such industries or connected to such countries, or which otherwise could reasonably pose material ESG risks, must discuss any such issues with TowerBrook’s Transaction Committee at an early stage in the investment consideration process. TowerBrook also seeks to engage with its preferred ESG consultants at an early stage in the investment consideration process to identify ESG-related risks and opportunities. 

Due Diligence

Once an early stage investment proceeds to due diligence, TowerBrook conducts ESG-related diligence targeted to the Company’s industry and specific risk profile. TowerBrook has developed a standard ESG diligence request list to confirm a target company’s level of compliance with TowerBrook’s ESG policies and relevant legislation and regulation. Additionally, TowerBrook has developed a specific detailed ESG diligence request list for certain industries, such as consumer goods and manufacturing. TowerBrook’s investment team members may also conduct site visits, as appropriate. TowerBrook’s preferred ESG consultants would be retained during the diligence stage to conduct a fulsome ESG diligence review. 

TowerBrook’s due diligence processes are designed to ensure that material issues, including ESG, are addressed when considering and evaluating investment opportunities.  TowerBrook seeks to undertake ESG due diligence on applicable private equity investments, including, but not limited to, those with industrial manufacturing capabilities. Environmental diligence typically comprises environmental Phase I site assessments, but this can be extended to include Phase II site assessment if necessary. TowerBrook may also conduct diligence on anti-corruption, data privacy, supply chain, safety and other governance matters, as appropriate. TowerBrook’s due diligence process for structured opportunities investments may also take into account ESG considerations, as appropriate. During diligence, TowerBrook also extensively references key executives and non-executives affiliated with the company, testing among other things for integrity and ethical reputation to help shape our view of the broader company’s culture and attitudes.

05.3. 補足情報 [任意]


PE 06. Types of ESG information considered in investment selection

06.1. プライベートエクイティの投資選択プロセスにおいて組織が通常どのような種類のESG情報を考慮するかを記載してください。

06.2. 投資委員会または類似の委員会において、この情報がどのように報告・検討・文書にまとめられているかを記載して下さい。

ESG risks and/or ESG-related opportunities are discussed in the investment memoranda presented to the applicable Transaction Committee or Investment Committee. Additionally, all diligence reports by advisors relating to ESG issues are presented to the relevant committee. ESG matters would then be discussed thoroughly, with such discussion including members of TowerBrook's legal team and portfolio group, and outside consultants if necessary. Consideration of ESG issues would be reflected in the minutes of the Committee meetings, as appropriate. The final Investment Committee acquisition memo identifies ESG risks and ESG opportunities in connection with the proposed opportunity, as appropriate.


PE 07. Encouraging improvements in investees

07.1. ディールストラクチャリングの際、ディール文書または投資後アクションプランにESG関連考慮事項を統合するためのプロセスは何ですか。

促している場合

          Advisor recommendations
        

07.2. これらの改善の種類を説明し、報告年度において事例がある場合には、その事例を提供してください。

Transaction Closing

At signing, TowerBrook’s legal team would consider whether to include detailed ESG clauses in  investment or shareholders’ agreements, as practicable and applicable.  The legal team and investment teams also work to verify due diligence findings via representations and warranties in the purchase agreement and seek specific indemnification as appropriate. 

200-Day Plan

The 200-day plan for each portfolio company includes development and publication of an appropriate ESG policy and development of procedures to implement, monitor and test such policy. Each 200-day plan includes standard ESG items, as well as any specific ESG items identified during diligence as relevant for a particular target company. Individual portfolio company action plans are designed, where appropriate, to address any opportunities for improvement. 

Ownership

During ownership, ESG related risks are managed by the boards and management teams of the individual portfolio companies. Since TowerBrook invests in a wide range of sectors, ESG risks vary widely from company to company.

07.3. 補足情報 [任意]

TowerBrook seeks to discuss the importance of ESG with each CEO of private equity portfolio companies, together with the Chair, who would have been separately instructed during onboarding with a Welcome Pack that explicitly addresses Responsible Ownership and the Chair’s role therein.TowerBrook actively monitors ESG at the portfolio company level, ensuring that systems and resources are in place to enable ESG risks to be effectively managed and that each portfolio company assigns specific management responsibility for ESG operations. TowerBrook’s approach to ESG has been to ask each portfolio company’s Audit & Risk Management Committee to review regularly such ESG risks as are relevant to that company. This practice is now evolving to establish a dedicated ESG (or similar) committee on each portfolio board. Portfolio company management is encouraged to engage directly with third parties (such as suppliers, developers, and contractors) to verify sound ESG practices. Furthermore, TowerBrook seeks to ensure adequate training on ESG at the portfolio company level, which may include sensitivity/diversity training and supply chain management training. 

Example

An example of integrating ESG considerations into the post-investment plan is our portfolio company, AustroCel Hallein. Following TowerBrook’s acquisition, a project was approved to construct a bioethanol plant that would enable the company to produce bioethanol by recycling a side product called brown liquor that is generated as part of the mill’s core manufacturing process. This investment is expected to significantly increase the earnings coming from green energy production, and to overall improve the financial profile of AustroCel Hallein.


PE 08. ESG issues impact in selection process

08.1. 報告年度において、ESG問題がプライベートエクイティ投資の選択プロセスにどのような影響を及ぼしたかを明示してください。

08.2. 報告年度において、ESG問題がプライベートエクイティ投資取引にどのような影響を及ぼしたかを明示してください。

          ESG issues has caused TowerBrook to pass on investment opportunities.
        

08.3. 補足情報 [任意]

In 2019, we abandoned opportunities relating to video gaming, online gambling, waste management and food ownership/ operation based on responsible ownership considerations (see PE 15.1). Over the past few years, have have abandoned an early stage investment in a lending business on ESG grounds, as we were uncomfortable with the high interest rate lending strategy. We also abandoned the opportunity to invest in a few direct selling businesses on the grounds of questionable selling practices.


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