ENVIRONMENTAL, SOCIAL AND GOVERNANCE POLICY
At FFL Partners (the “Firm”), we are committed to a responsible approach to environmental, social and governance (“ESG”) issues in the course of our investment activities and throughout our business operations.
We aim to deliver superior risk-adjusted returns to our investors, and our approach to responsible investment is intended to support that. Our ESG program is intended to help us and our portfolio companies to measure, manage, and mitigate risks, to improve operating efficiency where possible, and to build more financially valuable businesses.
We are a signatory to the UN PRI and are guided by their six Principles in the approach we take to managing material ESG issues. Consistent with, and subject to, any applicable fiduciary duties or legal, contractual, or regulatory requirements, we seek to consider material ESG issues throughout the investment process, including in our review of investment opportunities; during due diligence, and in the course of monitoring our portfolio company investments. Our representatives usually serve on the boards of our portfolio companies, enhancing our ability to influence their approach to managing material ESG risks.
For the purposes of this policy, “material” ESG issues are defined as those environmental, social, or governance matters that the Firm determines to have—or could potentially have—a significant impact on an organization’s go-forward ability to create or preserve financial value for that organization and its investors.
Purpose
The purpose of this policy is to define FFL’s approach to integrating material ESG issues across the Firm’s operations, including at the Firm level and throughout the investment lifecycle. FFL acknowledges that ESG is consistently evolving and commits to regularly reviewing this policy and making revisions as the Firm considers necessary or advisable.
Scope and Limitations
This policy is intended to reflect the Firm’s general framework for managing material ESG issues. The Firm’s ability to influence and exercise control over the companies in which our funds invest will vary depending on the investment structure and terms. In cases where the Firm determines that we have limited ability to conduct diligence or to influence and control the consideration of ESG issues in connection with an investment, we will only apply those elements of this policy that we determine to be reasonable and practicable. Examples of such cases include where a fund is a minority shareholder, has limited governance rights, or where other circumstances affect the fund’s ability to assess, set, or monitor ESG-related performance.
Investment Analysis and Decision-Making
During due diligence, the Firm and our third-party advisers assess numerous criteria to identify material risks and opportunities, which generally include material ESG issues. Material ESG issues can include key issues we expect all investments to assess, as well as other issues bespoke to certain sectors and business models. The material findings from due diligence efforts, including any material ESG findings, are incorporated into investment committee materials, and our ESG due diligence may inform the actions we take while working with portfolio companies.
Active Ownership
Through active ownership and performance monitoring practices, FFL intends to support and cultivate long-term financial growth for our investments. Through the participation of FFL representatives on the boards of our portfolio companies, we encourage best practices in corporate governance and aim to support effective boards whose role may include monitoring and managing material ESG risks and opportunities. We encourage our management teams to consider the UN Global Compact’s 10 Principles in the way they conduct business.
We recognize that material ESG issues present themselves in different ways across our portfolio companies and our various investment sectors. To that effect, the Firm and its advisors may work with portfolio companies to identify material risks and metrics, including with respect to ESG, according to each company’s operations.
If necessary to prioritize the portfolio companies on which to focus stewardship efforts, we will address the risks that we believe to be the most significant.
Reporting and Disclosure
FFL is committed to transparency in communications with our investors regarding material ESG matters and ongoing performance. To that end, we regularly report on Firm-level and fund-level ESG matters, which may include activities, strategies, incidents, and performance.