LLR Partners’ Environmental, Social, and Governance Policy (“ESG Policy”) as of April 2024:
OVERVIEW
Since our founding in 1999, LLR Walnut, L.P. (“LLR”) has been committed to conducting business in a manner that is 1) compliant with applicable laws, regulations, and best practices, 2) honest, fair, and respectful to our stakeholders, including our investors, portfolio companies, employees, communities, and environment, and 3) considerate of the environmental, social, and governance (“ESG”) impact of our investment decisions. As active investors, we take seriously our commitment to corporate responsibility and transparency and strive to account for these considerations wherever consistent with the fiduciary duties that we owe to our limited partners, and our investment objectives are aligned with this.
Responsible investment at LLR is led by our ESG Committee. The ESG Committee is a multi-disciplinary team that makes all key decisions for the ESG program and manages all ESG-related data and reporting (internal and external). The ESG Committee also reviews all aspects of the ESG program and is responsible for verifying internal compliance with our ESG policy. Although LLR does not categorically exclude types of investments, we only invest in line with our ethics, and we take ethical screening seriously in the diligence process. The ESG Committee consults with LLR deal teams if ever potential ethical conflicts arise in sourcing and diligence.
LLR’s ESG Policy is an integral part of our business model and its guiding principles are to consider factors such as the environment, labor and human rights and ethics when evaluating, managing and monitoring investments. This ESG Policy formalizes LLR’s longstanding commitment to adhering to the highest standards of conduct and business practices while complying with all regulations and laws governing the protection of human rights, occupational health and safety, the environment, and labor and business practices within the jurisdictions in which we conduct business.
This ESG Policy will apply to private equity investments considered or made by LLR following the date hereof and will be interpreted in accordance with local laws and regulations. In cases where LLR determines it has limited ability to conduct diligence on or to influence and control the integration of ESG considerations in the investment (for example, in cases where LLR is a minority shareholder, or where other circumstances affect LLR’s ability to assess, set or monitor ESG-related performance goals), it will not necessarily be feasible to implement ESG-related principles. LLR also recognizes that industry guidelines and best practices in managing ESG issues will continue to evolve over time and will review this ESG Policy from time to time to incorporate changes it believes are necessary.
LLR’s ESG Policy will be implemented in the spirit of the six principles outlined by the Principles for Responsible Investing (“PRI”) (source: https://www.unpri.org/about/the-six-principles as of November 2017):
1) To incorporate ESG issues into investment analysis and decision-making processes;
2) To be an active owner and to incorporate ESG issues into our ownership policies and practices;
3) To seek appropriate disclosure on ESG issues by the entities in which we invest;
4) To promote acceptance and implementation of the Principles within the investment industry;
5) To work with other PRI signatories to enhance effectiveness in implementing the Principles;
6) To report on our activities and progress towards implementing the Principles.
In addition to alignment with the six principles of the PRI, LLR’s ESG Policy and underlying procedures are also informed significantly by the recommendations of the Task Force on Climate Related Financial Disclosures (TCFD) and the Paris Agreement, as applicable.
LLR’S ESG POLICY
LLR will, to the best of our ability, and wherever consistent with the fiduciary duties we owe to our limited partners:
- Conduct our business dealings to the highest standards of honesty, integrity, fairness and respect;
- Comply with all relevant regulations and laws governing the protection of human rights, occupational health and safety, the environment, and labor and business practices within the jurisdictions in which we conduct business;
- Integrate the identification and management of ESG issues into our due diligence, decision-making and investment management and monitoring processes (including integration in post-close implementation plans);
- Utilize an internal ESG assessment tool to identify and characterize ESG factors with potential to have a material impact on the investment;
- Focus all related ESG assessment on material ESG issues, based on the SASB framework, including, but not be limited to:
- Environmental
- Energy and resource management
- GHG emissions
- Climate change related risks (physical and transition)
- Other systematic sustainability issues (large-scale, market-wide effects)
- Social
- Employee wellness
- Diversity, equity and inclusion
- Product safety and customer welfare
- Human rights
- Governance
- Business Ethics
- Compliance with ESG related regulation
- Data privacy and security
- Sustainability-related outcomes
- Investment aspects related to the UN Sustainable Development Goals (SDGs)
- Outcomes related to other systematic sustainability issues (large-scale, market-wide effects)
- Environmental
- Provide our stakeholders with accessibility and transparency into our decision-making processes.
LLR ESG POLICY MANAGEMENT
To support the implementation of the principles set forth in this ESG Policy, LLR will:
To support the implementation of the principles set forth in this ESG Policy, LLR will:
- Allocate the resources necessary for the implementation of this ESG Policy;
- Distribute and discuss the importance of this ESG Policy with our employees, instructing them in the identification and management of ESG risks, opportunities and appropriate mitigating measures, including the use of external subject matter experts and resources when needed;
- Identify ESG risks and opportunities as part of the due diligence process through inclusion of ESG-related issues in investment committee materials and discussions;
- Discuss the importance of this ESG Policy with our portfolio companies and prospective portfolio companies and encourage our portfolio companies to operate in a manner that is consistent with this ESG Policy and the PRI;
- Work with our portfolio companies to assist in the development of action plans to mitigate material ESG- related issues where it is commercially practical to do so, with appropriate targets and a recommended timetable for improvements. Although LLR conducts engagement and stewardship activities through a variety of means, most engagement occurs through the individual actions of our investment professional in the roles on corporate boards;
- Subject to any confidentiality obligations, provide timely information to limited partners on material ESG matters.
CONTACT US
If there are any questions regarding this ESG policy, contact Jason Jerista, Director of Investor Relations, at [email protected] or 215.717.2900.