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TowerBrook Capital Partners

PRI reporting framework 2020

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Post-investment (monitoring)

PE 09. Proportion of companies monitored on their ESG performance

09.1. Indicate whether your organisation incorporates ESG issues in investment monitoring of portfolio companies.

09.2. Indicate the proportion of portfolio companies where your organisation included ESG performance in investment monitoring during the reporting year.

 (in terms of total number of portfolio companies)

09.3. Indicate ESG issues for which your organisation typically sets and monitors targets (KPIs or similar) and provide examples per issue.

ESG issues

List up to three example targets of environmental issues

Example 1

          dedicated environmental policy
        

Example 2 (optional)

          electricity consumption
        

Example 3 (optional)

          waste production
        

List up to three example targets of social issues

Example 1

          tracking of employee engagement
        

Example 2 (optional)

          supply chain / responsible sourcing policy
        

Example 3 (optional)

          diversity and inclusion metrics, and specifically in 2019/2020 the diversity of our controlled portfolio company boards
        

List up to three example targets of governance issues

Example 1

          TowerBrook seeks to discuss the importance of ESG with each CEO of each PE portfolio company.
        

Example 2 (optional)

          Each chair of a PE company receives a Chair Welcome Pack that explicitly addresses Responsible Ownership and the Chair's role therein.
        

Example 3 (optional)

          Establish a dedicated ESG committee on each portfolio board, or else the chair opting to take explicit ownership of ESG at the board level.
        

09.4. Additional information. [Optional]

Our focus on best practice in responsible ownership led us to study the methodology established by the Sustainable Accounting Standards Board (SASB), an independent body dedicated to enhancing the efficiency of capital markets by fostering the high-quality disclosure of material sustainability information that meets the needs of investors. We concluded that the SASB framework was particularly relevant to TowerBrook because it is thoroughly researched and grounded in materiality and value creation.Drawing on the framework proposed by SASB, we built a set of metrics on which we annually measure ESG and Responsible Ownership across our portfolio. In 2019, we built on the SASB framework, incorporating many of the elements of the B Impact Assessment to give us further insight into how our companies’ activities affect their key stakeholders and communities. As before, we organized our survey into four areas: people, planet, partnership and performance. We continue to work to develop our metrics in a way that will allow us to track and report on progress over time. A summary of our methodology and the results of our review are presented in our Responsible Ownership Report 2019 (https://www.towerbrook.com/TowerBrook_Responsible_Ownership-2019.pdf).


PE 10. Proportion of portfolio companies with sustainability policy

10.1. Indicate if your organisation tracks the proportion of your portfolio companies that have an ESG/sustainability-related policy (or similar guidelines).

10.2. Indicate what percentage of your portfolio companies has an ESG/sustainability policy (or similar guidelines).

(in terms of total number of portfolio companies)

10.3. Additional information. [Optional]

In 2019, we conducted a survey of 26 of our privately held portfolio companies to understand more about how they measure up in terms of gender diversity, environmental initiatives, supply chain and other responsible corporate policies. We plan to continue to track these metrics and develop others in future years.


PE 11. Actions taken by portfolio companies to incorporate ESG issues into operations

11.1. Indicate the types of actions taken by your portfolio companies to incorporate ESG issues into operations and what proportion of your portfolio companies have implemented these actions.

Types of actions taken by portfolio companies

Implemented by percentage of portfolio companies

(in terms of total number of portfolio companies)

Implemented by percentage of portfolio companies

(in terms of total number of portfolio companies)

Implemented by percentage of portfolio companies

(in terms of total number of portfolio companies)

Implemented by percentage of portfolio companies

(in terms of total number of portfolio companies)

Implemented by percentage of portfolio companies
Implemented by percentage of portfolio companies

Implemented by percentage of portfolio companies

          CSR Management in planning; dedicated CSR position; health and safety implementation; Code of Conduct covering ESG and sustainability topics; social and educational programs
        

(in terms of total number of portfolio companies)

11.2. Describe how your organisation contributes to the portfolio companies’ resourcing and management of ESG issues.

TowerBrook publishes our Responsible Ownership Statement on our website, distributes it to all of our controlled portfolio companies and asks for it to be observed. In addition to establishing the policies described in the Responsible Ownership Statement, TowerBrook periodically asks all of its portfolio companies to complete a comprehensive questionnaire designed to identify ESG issues. TowerBrook continues to enhance its monitoring of its portfolio company's ESG risk during 2020. 

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. 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 ensures that all controlled portfolio companies have instituted the following formal policies in place: (i) Anti-Bribery, (ii) Code of Conduct, (iii) Corporate Governance, (iv) Health and Safety and (v) Anti-Harassment. TowerBrook also seeks to ensure that each portfolio company has established a dedicated board Committee (for example ESG or CRS), or modified an existing governance committee, to (a) establish a corresponding charter that is bespoke to the language, culture and business of each company, (b) review the company's significant strategies, activities and policies regarding ESG (including labor practices) and community impact and charitable activities, and (c) make recommendations to the Board that focus on maximizing long-term, sustainable value creation. TowerBrook has increased its touch points with the boards of portfolio companies. ESG is an issue we raise explicitly in onboarding  each portfolio chair and expect each chair to attend to, in partnership with TowerBrook, as a matter of providing effective governance. Portfolio company management would then engage with third parties (such as suppliers, developers, and contractors) to verify sound ESG practices. Finally, TowerBrook reviews annually the ESG program at each Portfolio Company board level. TowerBrook also provides training to senior management of its portfolio companies periodically that addresses ESG issues, covering relevant employee-related policies, sourcing policies, and environmental policies. TowerBrook also organizes periodic manager roundtables and/or conference calls, at which ESG features as a topic for discussion (together with anti-bribery, cybersecurity, diversity, etc.). 


PE 12. Type and frequency of reports received from portfolio companies

12.1. Indicate the type and frequency of reports you request and/or receive from portfolio companies covering ESG issues.

Type of reporting 

Typical reporting frequency 

          At least annually
        

Typical reporting frequency 

          At least annually
        

12.2. Describe what level of reporting you require from portfolio companies, and indicate what percentage of your assets are covered by ESG reporting.[OPTIONAL]

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. At the portfolio company level, our policy is that ESG is a recurring topic on the board agenda multiple times during the year, and is reviewed formally at least once annually is reviewed formally in a process led by the committee tasked to oversee ESG issues. Because TowerBrook appoints independent chairs, who are held to our ESG standards, to its portfolio companies, this process benefits from an additional layer of oversight. As part of its general ESG oversight, TowerBrook would review existing compliance with sustainability, and ethical business guidelines, as appropriate, and would encourage portfolio company management to introduce new guidelines if we deemed this necessary.

In 2019, we conducted a survey of 26 of our privately held portfolio companies to understand more about how they measure up in terms of gender diversity, environmental initiatives, supply chain and other responsible corporate policies. These 26 companies constituted approximately 81% of our AUM as of December 31, 2019. 


PE 13. Disclosure of ESG issues in pre-exit

13.1. Indicate whether during the reporting year your organisation disclosed information on ESG issues to potential buyers prior to exit for private equity investments.

13.2. Apart from disclosure, describe how your organisation considers ESG issues at exit.

Exit

Responsible investment and ownership considerations are also addressed in connection with exit, as appropriate. Any ESG issues would be addressed specifically pre-exit, or fully disclosed to a prospective purchaser, so that prospective buyers cannot use ESG factors to impose discounts due to lack of evidence that issues have been addressed. TowerBrook would also highlight ESG actions as selling points where applicable (for example, a “great ESG story to tell”). Transparency about what remains to be done, as well as about what has been done, is important in building trust and establishing an appropriate valuation. We would include ESG issues in pre-exit information to the extent applicable. 

TowerBrook signed documentation to exit our portfolio company Metallo in 2019.  Following TowerBrook's acquisition, a €35m capex project was approved to construct a new zinc fumer on the company's site in Belgium. The project was approved to further the company's strategy of being the industry's best in class with regard to observance of environmental standards. The zinc fumer effectively recycles the waste of other processes, thus enabling the company to become a zero-waste green recycler. Every year, more than 350,000 tons of raw materials are recycled via Metallo's processes and refined into new metal products for global customers.  Information on the zinc fumer was provided to potential acquirors pre-exit.

13.3. Additional information.


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