EMERGEVEST LIMITED
ESG Policy
May 2022
1. About EmergeVest
Formed in 2013, we are a global investment firm with US$750M+ of AuM that seeks to build great businesses, provide innovative capital solutions and generate value for all stakeholders.
We think without limitation. We are operator-led capital allocators. We are personally invested in the success of everything we do. We provide ambitious management teams and founders with access to global institutional capital and expertise through a personal relationship with our team. We provide investors with access to attractive and differentiated value creation.
We are passionate about the secure movement of goods, data and funds across the globe. We invest across the capital structure at the intersection of supply chain, technology and financial services where we have proven domain knowledge and/or operational expertise. We have completed US$2bn+ of transactions globally across 10+ transactions. We are active in growth buyouts, public-ready companies, capital solutions and early-stage venture investments. In every deal executed we have enjoyed a clear proprietary advantage and demonstrated significant value-add from an operational perspective.
The EmergeVest Advantage – from conventional to differentiation
Our strategy is about differentiation. It's about what sets us apart from the competition. We bring institutional-grade investment pedigrees and decades of experience. We have invested across market cycles and the capital structure, in a wide range of industries and geographies.
We have a truly global perspective, with deep experience in Asia. In addition to industry focus, we have world-class operational skills and experience. We know what it's like to be a cash-starved start-up. We know what it's like to operate as part of a global multinational corporation.
We have executed large-scale merger integrations, restructurings and digital transformations. We know go-to-market strategies and building the flywheel. We know family values on a global scale. We know that business is always personal which is why we take a hands-on, personal approach with our management teams and financial partners.
EmergeVest Operating System (EVOS)
EmergeVest's approach to portfolio management is called the EmergeVest Operating System (EVOS).
EVOS is key to our success, providing a unique investment approach to generate sustainable value creation. Utilizing our knowledge, experience and strategic global position, we have created a tried and test framework, tools and process to facilitate and support growth and transformation.
ESG leadership is a key driver of overall EVOS success, including ESG considerations ranging from people, planning, operational excellence. ESG is viewed as an enabler of investment success. All of this is driven by the EVOS strategic plan.
2. ESG Policy
We invest responsibly and with purpose. We value people, culture and doing the right thing. We believe that diverse and inclusive businesses are more successful. We believe responsible investments should make an impact. We believe that corporate responsibility extends to all stakeholders.
We are a proud signatory of The UN Principles for Responsible Investment (PRI), an international organization that works to promote the incorporation of environmental, social, and corporate governance factors (ESG) into investment decision-making.
In May 2021, EmergeVest became a signatory of the Institute for Limited Partners Association's Diversity and Inclusion Initiative and adopted the Diversity, Equity and Inclusion Policy. For further details please see the stand-alone EmergeVest 'Diversity, Equity and Inclusion Policy'.
2.1. Purpose
The purpose of this policy is to define EmergeVest's approach to the integration of ESG consideration and risks, as well as value creation drivers, into EVOS. EmergeVest shall consider material ESG issues in the course of its due diligence and in the management of investments, subject to our fiduciary duties. For the purposes of this policy, "material" ESG issues are defined as those issues that EmergeVest in its sole discretion determines have or have the potential to have a direct substantial impact on an organization's ability to create, preserve, or erode economic value, as well as environmental and social value for itself and its stakeholders.
2.2. Scope
EmergeVest shall apply this policy to all investments and will be interpreted in accordance with local laws and regulations.
2.3. Objectives
EmergeVest's ESG principles (Principles) are based on the United Nations Principles for Responsible Investment (UNPRI), and are as follows:
i. EmergeVest shall incorporate and appropriately document ESG issues the evaluation and decision-making process of potential investment opportunities.
ii. EmergeVest is an active, hands-on investor and financing partner, and will incorporate ESG into our portfolio management policies and practices.
iii. EmergeVest shall require appropriate disclosure on ESG issues by portfolio companies.
iv. EmergeVest shall promote acceptance and implementation of the UNPRI within the investment industry.
v. EmergeVest shall work together to enhance the effectiveness in implementing of the Principles.
vi. EmergeVest shall report our activities and progress towards implementing the Principles.
2.4. ESG Process Integration
EmergeVest will seek to integrate ESG considerations throughout the investment cycle.
2.4.1. Deal Sourcing:
To ensure the integration of ESG considerations in the pre-investment phase, and subject to EmergeVest's determination of what is reasonable and appropriate for each investment, EmergeVest will:
Undertake ESG due diligence: Conduct an assessment of ESG value creation opportunities or risks for prospective investment opportunities. Where management of, or performance on, a material issue is considered by EmergeVest to need improvement, EmergeVest will either prompt further investigation, engage company management to support the development of a corrective action plan or cease the prospective investment opportunity.
Documentation: In cases where material ESG-related issues are considered during the due diligence process, EmergeVest will seek to document, for internal use, the issues considered, findings, and next steps, if any.
2.4.2. Investment Decision:
The ESG findings unearthed during due diligence, subject to EmergeVest's determination of what is reasonable and appropriate for each investment, will be included in the investment memorandums to ensure that the investment committee is aware of such issues, even if no risks are identified, when deciding whether to invest in a company.
Documentation: In cases where ESG issues need to be managed, they will be included in the investment agreement with the portfolio company.
2.4.3. Ownership:
To manage ESG risks and value creation opportunities during the holding period of investments, and subject to EmergeVest's determination of what is reasonable and appropriate for each investment, EmergeVest will:
Monitor progress: Where there are material issues identified during the diligence process, include the management of these issues in the EVOS plan post-close, or otherwise monitor ongoing progress on ESG issues, as applicable. Where management of, or performance on, a material issue is considered by EmergeVest to need improvement, EmergeVest will work with company management to support the development of a corrective action plan.
Documentation: In cases where material ESG-related risks and opportunities are being monitored or managed by EmergeVest, EmergeVest will document, for internal use, the issue, progress, and next steps, if any.
Engage during investment period:
✓ EmergeVest will encourage the management teams of portfolio companies to identify, measure and raise material ESG issues to the relevant decision-makers.
✓ Where appropriate, EmergeVest will assist portfolio companies in the development of action plans to adequately address the identified ESG-related risks and opportunities. Where applicable, this may be part of the EVOS plan. In addition, where relevant, EmergeVest will invite portfolio companies to participate in its proactive ESG programs.
✓ Where appropriate and reasonable, EmergeVest will also support its portfolio companies' efforts to report externally and internally on their ESG approach and performance as related to material ESG issues. EmergeVest will communicate to portfolio companies its commitment to responsible investment, as well as information on EmergeVest's programs for partnering on ESG issues.
Transparency and stakeholder engagement
EmergeVest will seek to be transparent in its approach to incorporating ESG considerations in its activities by reporting at least annually on its progress and outcomes at the Firm level. The format of this reporting may vary among written public reports, or verbal informal reports, or confidential fund or asset-level reports to EmergeVest investors.
Where appropriate, throughout the investment cycle, EmergeVest will seek to actively engage relevant stakeholders in an effort to make informed decisions that may affect these stakeholders.
2.4.4. Exit
The premise underlying all responsible investment efforts during the holding period is that managing ESG issues throughout the investment cycle can reduce risk and enhance company value, which can be realized upon exit.
2.5 Environmental Considerations
EmergeVest will work with portfolio companies to measure and monitor the following environmental issues where appropriate, including:
✓ Emissions – emissions from gaseous fuel consumption and vehicles, greenhouse gas emissions from non-renewable fuels (direct) and purchased electricity (indirect).
✓ Energy Efficiency – energy consumption and intensity from non-renewable and renewable sources.
✓ Use of Resources – water consumption and intensity, wastewater treatment and discharge, waste including packaging material consumption and intensity, use of chemicals.
✓ Climate Change – consider (a) risk of transitioning to a lower-carbon economy (policy, legal, technology and market changes) and (b) physical risk result from changes in climate patterns, as outlined in the recommendations of the Task Force on Climate-Related Financial Disclosures.
2.6 Social Considerations
EmergeVest will work with portfolio companies to measure and monitor the following social issues where appropriate:
✓ Human Capital – workforce by gender, ethnicity employment type, age group and geography; workforce turnover.
✓ Health and Safety – compliance with applicable health and safety laws and standards; work-related incidents and lost days due to injury.
✓ Development and Training – percentage and average hours of training completed per employee.
✓ Labor Standards – compliance with applicable labor laws and regulations; policies to avoid forced and underaged labor.
✓ Supply Chain Management – ü practices of engaging suppliers, taking into consideration cost, time, quality and continuity, as well as, suppliers' compliance with applicable laws, regulations and standards concerning anti-corruption, business ethics, data protection, environment, intellectual property, labor practices, product quality and safety.
✓ Product responsibility – total and percentage of products sold or shipped subject to recalls for health and safety reason and rectification action; product and service-related complaints received and process of handling complaints; intellectual property practices; consumer data protection and privacy policies.
✓ Community investments – areas of contribution e.g., education, environment, health, culture, sports, and resources contributed.
2.7 Governance Considerations
EmergeVest will work with portfolio companies to measure and monitor the following governance issues where appropriate:
✓ Corporate Governance
✓ Business Ethics
2.8 Exclusion Policies
EmergeVest's preferred outcome is improvement in the portfolio companies' ESG compliance and capabilities, but if, after engaging with a target, EmergeVest finds that it does not meet the standard outlined in this Policy, or is not expected to do so within a reasonable time frame, EmergeVest will exclude it from investment consideration.
EmergeVest recognizes international consensus in excluding investments in target companies directly involved in the manufacture, development, trading and maintenance of:
1. Weapons and arms;
2. Major components of weapons and arms;
3. Adult entertainment; and
4. Recreational drugs.
EmergeVest excludes investments in states sanctioned by the UN Security Council and the EU.
Our Legal and Compliance department maintains a list of those companies and states which are at any time, excluded from investment consideration. This exclusion list will be communicated to staff employed in investment activities.
2.9 Fiduciary Duties
EmergeVest shall exercise due care, skill and diligence, in line with professional norms and standards of behavior.
We shall act in good faith in the interest of our limited partners and investors, including avoiding conflicts of interest, or when such activities are unavoidable, to balance and disclose such conflicts in accordance to the Compliance Manual.
Formed in 2013, we are a global investment firm with US$750M+ of AuM that seeks to build great businesses, provide innovative capital solutions and generate value for all stakeholders.
We think without limitation. We are operator-led capital allocators. We are personally invested in the success of everything we do. We provide ambitious management teams and founders with access to global institutional capital and expertise through a personal relationship with our team. We provide investors with access to attractive and differentiated value creation.
We are passionate about the secure movement of goods, data and funds across the globe. We invest across the capital structure at the intersection of supply chain, technology and financial services where we have proven domain knowledge and/or operational expertise. We have completed US$2bn+ of transactions globally across 10+ transactions. We are active in growth buyouts, public-ready companies, capital solutions and early-stage venture investments. In every deal executed we have enjoyed a clear proprietary advantage and demonstrated significant value-add from an operational perspective.
The EmergeVest Advantage – from conventional to differentiation
Our strategy is about differentiation. It's about what sets us apart from the competition. We bring institutional-grade investment pedigrees and decades of experience. We have invested across market cycles and the capital structure, in a wide range of industries and geographies.
We have a truly global perspective, with deep experience in Asia. In addition to industry focus, we have world-class operational skills and experience. We know what it's like to be a cash-starved start-up. We know what it's like to operate as part of a global multinational corporation.
We have executed large-scale merger integrations, restructurings and digital transformations. We know go-to-market strategies and building the flywheel. We know family values on a global scale. We know that business is always personal which is why we take a hands-on, personal approach with our management teams and financial partners.
EmergeVest Operating System (EVOS)
EmergeVest's approach to portfolio management is called the EmergeVest Operating System (EVOS).
EVOS is key to our success, providing a unique investment approach to generate sustainable value creation. Utilizing our knowledge, experience and strategic global position, we have created a tried and test framework, tools and process to facilitate and support growth and transformation.
ESG leadership is a key driver of overall EVOS success, including ESG considerations ranging from people, planning, operational excellence. ESG is viewed as an enabler of investment success. All of this is driven by the EVOS strategic plan.
2. ESG Policy
We invest responsibly and with purpose. We value people, culture and doing the right thing. We believe that diverse and inclusive businesses are more successful. We believe responsible investments should make an impact. We believe that corporate responsibility extends to all stakeholders.
We are a proud signatory of The UN Principles for Responsible Investment (PRI), an international organization that works to promote the incorporation of environmental, social, and corporate governance factors (ESG) into investment decision-making.
In May 2021, EmergeVest became a signatory of the Institute for Limited Partners Association's Diversity and Inclusion Initiative and adopted the Diversity, Equity and Inclusion Policy. For further details please see the stand-alone EmergeVest 'Diversity, Equity and Inclusion Policy'.
2.1. Purpose
The purpose of this policy is to define EmergeVest's approach to the integration of ESG consideration and risks, as well as value creation drivers, into EVOS. EmergeVest shall consider material ESG issues in the course of its due diligence and in the management of investments, subject to our fiduciary duties. For the purposes of this policy, "material" ESG issues are defined as those issues that EmergeVest in its sole discretion determines have or have the potential to have a direct substantial impact on an organization's ability to create, preserve, or erode economic value, as well as environmental and social value for itself and its stakeholders.
2.2. Scope
EmergeVest shall apply this policy to all investments and will be interpreted in accordance with local laws and regulations.
2.3. Objectives
EmergeVest's ESG principles (Principles) are based on the United Nations Principles for Responsible Investment (UNPRI), and are as follows:
i. EmergeVest shall incorporate and appropriately document ESG issues the evaluation and decision-making process of potential investment opportunities.
ii. EmergeVest is an active, hands-on investor and financing partner, and will incorporate ESG into our portfolio management policies and practices.
iii. EmergeVest shall require appropriate disclosure on ESG issues by portfolio companies.
iv. EmergeVest shall promote acceptance and implementation of the UNPRI within the investment industry.
v. EmergeVest shall work together to enhance the effectiveness in implementing of the Principles.
vi. EmergeVest shall report our activities and progress towards implementing the Principles.
2.4. ESG Process Integration
EmergeVest will seek to integrate ESG considerations throughout the investment cycle.
2.4.1. Deal Sourcing:
To ensure the integration of ESG considerations in the pre-investment phase, and subject to EmergeVest's determination of what is reasonable and appropriate for each investment, EmergeVest will:
Undertake ESG due diligence: Conduct an assessment of ESG value creation opportunities or risks for prospective investment opportunities. Where management of, or performance on, a material issue is considered by EmergeVest to need improvement, EmergeVest will either prompt further investigation, engage company management to support the development of a corrective action plan or cease the prospective investment opportunity.
Documentation: In cases where material ESG-related issues are considered during the due diligence process, EmergeVest will seek to document, for internal use, the issues considered, findings, and next steps, if any.
2.4.2. Investment Decision:
The ESG findings unearthed during due diligence, subject to EmergeVest's determination of what is reasonable and appropriate for each investment, will be included in the investment memorandums to ensure that the investment committee is aware of such issues, even if no risks are identified, when deciding whether to invest in a company.
Documentation: In cases where ESG issues need to be managed, they will be included in the investment agreement with the portfolio company.
2.4.3. Ownership:
To manage ESG risks and value creation opportunities during the holding period of investments, and subject to EmergeVest's determination of what is reasonable and appropriate for each investment, EmergeVest will:
Monitor progress: Where there are material issues identified during the diligence process, include the management of these issues in the EVOS plan post-close, or otherwise monitor ongoing progress on ESG issues, as applicable. Where management of, or performance on, a material issue is considered by EmergeVest to need improvement, EmergeVest will work with company management to support the development of a corrective action plan.
Documentation: In cases where material ESG-related risks and opportunities are being monitored or managed by EmergeVest, EmergeVest will document, for internal use, the issue, progress, and next steps, if any.
Engage during investment period:
✓ EmergeVest will encourage the management teams of portfolio companies to identify, measure and raise material ESG issues to the relevant decision-makers.
✓ Where appropriate, EmergeVest will assist portfolio companies in the development of action plans to adequately address the identified ESG-related risks and opportunities. Where applicable, this may be part of the EVOS plan. In addition, where relevant, EmergeVest will invite portfolio companies to participate in its proactive ESG programs.
✓ Where appropriate and reasonable, EmergeVest will also support its portfolio companies' efforts to report externally and internally on their ESG approach and performance as related to material ESG issues. EmergeVest will communicate to portfolio companies its commitment to responsible investment, as well as information on EmergeVest's programs for partnering on ESG issues.
Transparency and stakeholder engagement
EmergeVest will seek to be transparent in its approach to incorporating ESG considerations in its activities by reporting at least annually on its progress and outcomes at the Firm level. The format of this reporting may vary among written public reports, or verbal informal reports, or confidential fund or asset-level reports to EmergeVest investors.
Where appropriate, throughout the investment cycle, EmergeVest will seek to actively engage relevant stakeholders in an effort to make informed decisions that may affect these stakeholders.
2.4.4. Exit
The premise underlying all responsible investment efforts during the holding period is that managing ESG issues throughout the investment cycle can reduce risk and enhance company value, which can be realized upon exit.
2.5 Environmental Considerations
EmergeVest will work with portfolio companies to measure and monitor the following environmental issues where appropriate, including:
✓ Emissions – emissions from gaseous fuel consumption and vehicles, greenhouse gas emissions from non-renewable fuels (direct) and purchased electricity (indirect).
✓ Energy Efficiency – energy consumption and intensity from non-renewable and renewable sources.
✓ Use of Resources – water consumption and intensity, wastewater treatment and discharge, waste including packaging material consumption and intensity, use of chemicals.
✓ Climate Change – consider (a) risk of transitioning to a lower-carbon economy (policy, legal, technology and market changes) and (b) physical risk result from changes in climate patterns, as outlined in the recommendations of the Task Force on Climate-Related Financial Disclosures.
2.6 Social Considerations
EmergeVest will work with portfolio companies to measure and monitor the following social issues where appropriate:
✓ Human Capital – workforce by gender, ethnicity employment type, age group and geography; workforce turnover.
✓ Health and Safety – compliance with applicable health and safety laws and standards; work-related incidents and lost days due to injury.
✓ Development and Training – percentage and average hours of training completed per employee.
✓ Labor Standards – compliance with applicable labor laws and regulations; policies to avoid forced and underaged labor.
✓ Supply Chain Management – ü practices of engaging suppliers, taking into consideration cost, time, quality and continuity, as well as, suppliers' compliance with applicable laws, regulations and standards concerning anti-corruption, business ethics, data protection, environment, intellectual property, labor practices, product quality and safety.
✓ Product responsibility – total and percentage of products sold or shipped subject to recalls for health and safety reason and rectification action; product and service-related complaints received and process of handling complaints; intellectual property practices; consumer data protection and privacy policies.
✓ Community investments – areas of contribution e.g., education, environment, health, culture, sports, and resources contributed.
2.7 Governance Considerations
EmergeVest will work with portfolio companies to measure and monitor the following governance issues where appropriate:
✓ Corporate Governance
- Capital Structure – efficient and appropriate, taking into consideration anticipated profitability, cash flows, investment requirements and capital cost across economic cycles.
- Risk Management – active management of risk factors that can affect operations.
- Board independence and leadership – appointment of independent directors, taking into consideration the necessary skills and diversity to effectively oversee management's execution of strategies.
- Executive Remuneration – appropriate and competitive relative to size and performance.
- Accounting Standards – IFRS or equivalent.
- External Auditors – appointed by, and reports directly to, the audit committee of the board of directors.
- Internal Control– proper internal control policies and procedures.
- Internal Audit – reports directly to the audit committee of the board of directors
✓ Business Ethics
- Anti-Corruption and Anti-Bribery – appropriate codes and procedures; compliance with the U.S. Foreign Corrupt Practices Act (FCPA) and other applicable laws.
- Sanctions – compliance with Specially Designated Nationals and Blocked Persons Lists maintained by the Office of Foreign Assets Control, U.S. Department of Treasury (OFAC) and other similar lists mandated by the European Union and the United Nation.
- Anti-Money Laundering and Counter-Terrorism Financing – appropriate policy, procedures and control to mitigate the risk of money laundering and terrorist financing.
2.8 Exclusion Policies
EmergeVest's preferred outcome is improvement in the portfolio companies' ESG compliance and capabilities, but if, after engaging with a target, EmergeVest finds that it does not meet the standard outlined in this Policy, or is not expected to do so within a reasonable time frame, EmergeVest will exclude it from investment consideration.
EmergeVest recognizes international consensus in excluding investments in target companies directly involved in the manufacture, development, trading and maintenance of:
1. Weapons and arms;
2. Major components of weapons and arms;
3. Adult entertainment; and
4. Recreational drugs.
EmergeVest excludes investments in states sanctioned by the UN Security Council and the EU.
Our Legal and Compliance department maintains a list of those companies and states which are at any time, excluded from investment consideration. This exclusion list will be communicated to staff employed in investment activities.
2.9 Fiduciary Duties
EmergeVest shall exercise due care, skill and diligence, in line with professional norms and standards of behavior.
We shall act in good faith in the interest of our limited partners and investors, including avoiding conflicts of interest, or when such activities are unavoidable, to balance and disclose such conflicts in accordance to the Compliance Manual.