Responsible Investment Policy

CGE Partners is a private equity fund investing in and partnering with high growth, mid-market businesses across Europe. We have a thematic and sector-based approach. Our sector-focused investment strategy is driven by the long-term growth potential of key non-cyclical mega trends in which we invest including resource efficiency, compliance and transparency, life sciences advancement, and productization of intelligence. Through our investments in these mega trends and how we operate as a firm, we seek to be a force for good as well as a force for change, and to generate positive societal value. We believe that central to this is incorporating the consideration of material Environmental, Social and Governance (ESG) factors throughout the investment cycle so as to create long-term value for all stakeholders and fulfil our fiduciary duty to our clients.

The businesses we partner with are providing mission critical solutions to global problems and increasingly these will contribute to societal and environmental benefits, by for instance facilitating investment into renewable energy and supporting the decarbonisation of the economy, and minimising environmental, health and safety hazards. We are committed to investing responsibly and ESG and ethical considerations are integral to our investment decisions, the way we manage our portfolio companies, and how we operate as a firm. To demonstrate this, CGE has made a number of commitments. 

• We are a signatory to the UN Principles for Responsible Investment (UNPRI) and commit to its six Principles. 
• As members of the Initiative Climat International (iCI), we commit to effectively analyse, manage and mitigate climate-related financial risk and emissions in our portfolio. We aim to facilitate the setting of Net Zero or Science Based Targets for every company we invest in. In this way, we seek to play our role in supporting the transition to a net-zero emissions economy and the goals set out in the 2015 Paris Agreement on climate change. 
• We commit to contributing towards the realisation of the Sustainable Development Goals through our investments and have aligned our Key Performance Indicators with these global targets to track our progress in our portfolio activities.
• We tackle systemic issues through the actions and objectives of this Policy. We assess the risks and opportunities related to climate change, human rights, and build these into our ownership strategy and activities.

At the firm level, we are proud to be a Certified B Corp, highlighting our commitment to meeting exceptional standards of corporate governance, transparency, accountability, and social and environmental responsibility. To ensure we are being mindful of our environmental footprint, we undertake an annual assessment of our environmental impact, recording our Scope 1, 2 and 3 carbon emissions (Scope 3 Financed Emissions included where available). We aim to reduce the carbon intensity of our operations and actively seek ways to reduce overall emissions. While carbon offsetting and removal technologies are not a perfect solution, we have removed or offset all calculated emissions associated with CGE’s operations since inception.

We have also worked hard on our diversity agenda and invested in the health and wellbeing of our colleagues. Our people are the driving force of our business, and we want to foster a happy, healthy, and diverse workforce both within our firm and in our portfolio companies. It is important to us that the standards and vision we set at the firm level translate to the portfolio level as well. 

We have developed an ESG Framework which considers the material issues for all the businesses and sectors we invest in, regardless of the size of our investment. The most material factors we have identified for our target sectors are grouped into areas of Governance, Workers, Community, and Environment. We incorporate these ESG factors at every stage of our investment cycle – to ensure ESG matters are considered from screening to exit. We make majority investments so are in a highly influential position to implement policies, set targets, and review outcomes. Our approach is laid out in more detail below:

Our investment strategy seeks out opportunities in areas where solutions are needed to address global problems across the sectors we have identified. Pre-investment we screen all potential investments to ensure we only invest in companies that are in line with our core values and investment mandate. We will not invest in companies including (but not limited to) those which are linked to: 

• An illegal economic activity (meaning any activity which is illegal under the laws or regulations applicable to CGE)
• The production and trade of tobacco products
• The production of any weapons and ammunition 
• The production or distribution of pornography 
• Illegal access to electronic data networks and associated data
• Businesses solely acting as operating companies in primary industries (extraction, agriculture, oil & gas, timber)
• Gambling 
• Highly regulated financial services, such as banks
• Technology businesses facing binary adoption/approval outcomes  
• Any other activities which (in our opinion) conflict with our core values or which we feel is exploitative of vulnerable customers, communities, or habitats 

If a company passes our pre-investment screening, it goes through our due diligence process to carefully assess the material ESG risks and opportunities for the specific company and whether it meets our minimum requirements to demonstrate good corporate citizenship. The findings from the due diligence are considered by our investment committee as ESG factors identified at this stage are integral to our investment decision-making process. This step in the investment cycle also provides us with the baseline information that we need to go on to successfully engage on ESG issues with our portfolio companies.

CGE Partners believes that for businesses to thrive and grow, they need to have responsible sustainability practices embedded throughout their operations. Based on pre-investment findings, we work with all portfolio companies to establish ESG KPIs and a roadmap for improvement to support them in the development of their sustainability practices – no matter where they are in their sustainability journey. We put ESG on the board agenda for our portfolio companies, to ensure identified material ESG factors are monitored and managed appropriately.  As a B Corp we have seen the benefit that a focus on sustainability issues can bring to a growing organisation. Particular issues have additional considerations and guidelines:

Environment

Climate change is a systemic issue and our approach to it must be built on external guidance to contribute to a coordinated global response. We record our Scope 1, 2 and 3 emissions, including Financed Emissions where available, in line with the latest Greenhouse Gas Protocols and other frameworks and emission factors, to identify the drivers and impact of our operations and value chain, and to identify physical climate risks. We require the companies we invest it to do the same, and support them through the process of measuring their carbon footprint if they are not already doing so. Once the sources of emissions are understood we can focus on reductions, and we engage with our portfolio companies to help them set appropriate reduction targets, and require them to report to us on this every year. Our aim is for all portfolio companies to have Science Based Targets or a Net Zero commitment set and verified during our investment period. We can ensure that our positive impact persists beyond our hold period, and puts in place the lasting changes needed to help address climate change.

Human Rights

We aim to contribute to the upholding of human rights through reviewing and managing the associated opportunities and risks within our investments. We ask portfolio companies to put in place comprehensive employment policies, and to map their supply chains to understand and eliminate any material risks and ensure adherence to the UN Guiding Principles on Business and Human Rights. Through our investments in growing businesses, we aim to facilitate the organic growth of decent jobs which are paid at least the living wage wherever they are based.

Cybersecurity

A company’s cybersecurity impacts the wider economy and community by providing a defence against data loss, the proliferation of malware, and associated growth in cyber-crime. Businesses must protect the data of their employees, customers and other stakeholders, and have a responsibility to be a good citizen in a deeply connected world. We conduct annual cyber security for all staff and continuously monitor our network and systems. We ask our Portfolio Companies to similarly train all staff at least annually, conduct external testing of systems and for overall cybersecurity to be managed at Board level.

Political engagement

We will publicly disclose any firm involvement in lobbying or donating to political parties, and staff activities in these areas are regulated by the firm’s compliance manual and ethics policy. We will positively contribute to regulation and governance through engagement and collaboration with industry bodies such as the BVCA and iCI, and consultations by the FCA and other relevant bodies.  

Ongoing stewardship

Through active ownership and engagement with management teams, we can ensure that roadmaps are being successfully followed and implemented, and we encourage the sharing of best practice throughout the portfolio to help drive improvements. We repeat our initial diligence review annually, to ensure improvements are made in all areas. We collect quarterly KPI data to track specific areas more closely. In partnership with our portfolio companies we aim to create a bespoke ESG strategy for each, laying out a vision, targets and commitments, processes and responsibilities around ESG. As investors solely into unlisted companies we do not carry out proxy voting.

We require our portfolio companies to provide us with regular and suitable ESG disclosure to enable us to monitor and actively manage the material ESG factors identified for each company, and to report any material ESG incidents to us. We report quarterly to our investors on the ESG performance of the portfolio and progress towards their ESG strategy through a dedicated section in our investor reports, and if necessary, any material ESG incidents as soon as it is appropriate. We also include any changes to this policy and details of its implementation in our annual reporting to investors.

It is the responsibility of every member of the investment team to ensure that ESG considerations are integrated at each stage of the investment cycle. ESG training needs for team members are reviewed bi-annually and appropriate training is provided on an at least annual basis to ensure that colleagues have the knowledge and tools they need to comply with this policy. Annual performance reviews and appraisals will include a review of identified ESG objectives for each member of the investment team, and this will help to inform remuneration decisions. Additionally, our Code of Ethics sets out the standards of conduct expected of our staff and details policies and procedures for addressing certain potential conflicts of interest, including those that arise in conflict with this policy. Any conflict of interest which arises under this policy or is suspected of arising under this policy must be notified as soon as possible to the CFO.