Transparency of Sustainability Risk Policy and Principal Adverse Sustainability Impacts
Levine Leichtman Capital Partners, LLC (“LLCP”) recognizes that in considering whether or not to invest with LLCP, some investors may seek assurance that their funds will be invested responsibly with sensitivity to the environmental and social concerns of communities globally. Investors may also wish to invest in businesses that are operated with due attention to these concerns and are governed in a way that helps ensure this result. LLCP believes that companies with environmental, social and governance (“ESG”) standards may be better run, have fewer business risks and may deliver better value to investors. Accordingly, LLCP seeks to integrate ESG assessments into its investment decision-making and analysis because it believes that this may yield successful, sustainable and replicable results. In particular:
- LLCP reviews appropriate ESG factors as part of the due diligence review prior to committing to an investment. These factors may include, but are not limited to, environmental impacts and conservation opportunities; corporate governance; management structure and compensation; and employee relations and diversity.
- As part of the approval process for each investment, LLCP considers ESG concerns and opportunities identified during due diligence. Where an ESG concern or opportunity is identified, the approval of the investment may require a documented plan to address it as part of the operating plan developed for the investment.
- After an investment is made, LLCP monitors ongoing progress on any identified ESG issues or opportunities and seeks to identify whether any new ESG issues or opportunities have arisen since the investment date. Where management of, or performance on, a material issue is considered by LLCP to need improvement, LLCP will work with company management to support the development of a corrective action plan.
LLCP has considered, and continues to consider, ESG factors in its investment process but at this time it does not plan to specifically consider the principal adverse impacts of investment decisions on sustainability factors required by Regulation 2019/2088 on sustainability-related disclosures in the financial services sector dated 27 November 2019 (“SFDR”). LLCP has chosen not to do so for the present time as it has fewer than 500 employees and considers that its existing ESG policies and procedures are appropriate, proportional and tailored to the investment strategies of LLCP’s clients. LLCP continues to closely monitor regulatory developments with respect to the SFDR and other applicable ESG-focused laws and regulations, including the implementation of related and secondary legislation and regulatory guidance, and will, where required or otherwise appropriate, make changes to its existing policies and procedures.