A clear commitment to responsible investing
ELF Capital Group is strongly committed to responsible investing. As a financing provider, ELF believes that responsible investing is an important aspect when evaluating new investment opportunities and managing investment risks and returns in the short- and long-term. We strongly encourage portfolio companies to ensure that environmental, social and governance considerations are integrated within each of their operations. Management of these issues should not be an ad-hoc consideration but integrated into business as usual and key to delivering long-term, responsible, sustainable growth.
Five Pillars
The five pillars below help to guide our own decision-making process, and provide an ESG framework for our portfolio companies to ensure they act in a responsible manner. Each of our ESG pillars is covered in greater detail below and focuses on both the management of ESG risks and realisation of potential commercial opportunities. Whilst these pillars form the basis of our expectations of portfolio company performance, we understand that they are likely to vary in relevance across our businesses and the markets in which they operate. We therefore apply these on a case-by-case basis to ensure we are managing key material ESG risks and opportunities.
A) Environment – minimising and managing environmental impact
Minimising and managing key environmental impacts is fundamental to good environmental stewardship, and is core to acting as a responsible investor/business. Compliance with the appropriate regulatory framework is an essential requirement, and we expect all our portfolio companies to have the appropriate monitoring systems in place to ensure they meet all current regulatory requirements.
Beyond meeting compliance requirements, we believe there are numerous opportunities to deliver commercial value through ongoing improvements to environmental management, specifically focusing on resource efficiency and energy management.
The focus and breadth of issues will be shaped by individual companies and would be expected in most cases, to address the following operational impact areas:
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Energy – manage and minimise energy usage (considering buildings, fleet and travel);
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Waste – follow the waste management hierarchy: 1) prevention, 2) reuse, 3) recycle, then 4) disposal (with disposal to landfill being the least preferred option); and
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Water – manage and minimise water usage.
B) People – respecting and empowering employees
We believe that developing appropriate people policies which focus on respecting and investing in employees will contribute towards and engaged and motivated workforce. Where possible we encourage portfolio companies to:
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Provide flexibility to employees in managing their work-life balance;
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Offer opportunities for learning and development;
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Identify and invest in talent;
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Operate open two-way communication with employees;
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Encourage and promote a diverse workforce; and
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Ensure the health and safety of all employees.
This is not an exhaustive list and we expect initiatives in this area to be relevant to the respective individual business and the market in which they operate. At the very least we would expect portfolio companies to meet industry practice in people management and benchmark themselves on a regular basis against industry peers. Health and safety should be a key board agenda for all portfolio companies.
C) Business Ethics – adhering to the highest ethical standards
At all times we expect honest and transparent business practices. We expect portfolio companies to:
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Maintain high standards of business integrity at all times;
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Have a clear anti-corruption and anti-bribery policy supported by appropriate levels of compliance monitoring; and
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Understand key risks associated with suppliers’ labour practices (i.e. the use of child labour, working conditions, wages and discrimination) and environmental impact throughout the supply chain
D) Governance – committing to highest standards of corporate governance
Good governance is vital and underpins the performance of our portfolio companies. We insist that companies have regular, structured board meetings with supporting papers, undertake regular strategic planning and have a clear focus on the revenue opportunities and operational improvements that will drive shareholder value. We expect companies to have clear anti-bribery and anti-corruption policies in place.
In addition to this, and relevant to this policy, we expect our portfolio companies to ensure that responsibility for ESG related matters are considered at board level on a periodic basis.
E) Community – delivering positive community engagement
Positive community engagement can offer a range of business benefits (recruitment, enhance reputation and brand etc.) and provide businesses with support from the communities within which they operate. Typical positive engagement may include:
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Linking up with charities in the area;
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Sponsoring specific workplace projects;
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Sponsoring wider community initiatives; and
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Minimising any adverse direct community impacts
We recognise that portfolio companies work with a varied number of local and national charities, and that the reasons for each engagement are unique to each organisation.
United Nations – Sustainable Development Goals
In addition to our own ESG pillars described above we also consider the Sustainable Development Goals (SDGs) set by the United Nations General Assembly in 2015. The SDGs are a collection of 17 interlinked goals designed to be a "blueprint to achieve a better and more sustainable future for all" (United Nations, 2017). Where possible we encourage portfolio companies to take these goals into account as additional building block in their decision-making process.
Continuous monitoring
ELF is closely monitoring trends and developments in the ESG space and will review and amend its ESG policy as appropriate from time to time.