Responsibility

Embedding ESG into the investment cycle

Triton’s ESG programme is based on our responsible investment policy and applies to all investment strategies.

In Private Equity, which accounts for around 90% of Triton’s funds under management, ESG risks and opportunities are identified and managed throughout the investment cycle – from initial research to our final exit from the company (as shown below),

ESG Governance Structure

Our ESG governance structure enables Triton’s PCs to mitigate risks and realise ESG opportunities aligned to their business activities, helping them create and protect value under our ownership and for the future.

Within Triton, overall responsibility for the ESG programme, along with all investment decisions, sits with the Fund Manager Board. The Board is advised by the Investment Advisory Committee (“IAC”) and receives regular reports from the ESG team.

Triton’s dedicated ESG team of five full-time professionals works closely with the deal teams and PC board representatives. It also provides ongoing support and expertise to ESG representatives within PCs.

In all cases, the PC board has ultimate responsibility for the ESG agenda. In practice, PC CEOs designate responsibility for delivery of the ESG plan to their management team.

Depending on the company, this might be the CFO, in-house counsel, HR, Communications Director, Quality Health Safety Environment Director, or a dedicated Sustainability role. These individuals are supported by the ESG team every step of the way.

PRINCIPAL ADVERSE SUSTAINABILITY IMPACTS STATEMENT

Triton¹ considers the principal adverse impacts of its investment decisions on sustainability factors.

The Triton Responsible Investment Policy

Triton’s Responsible Investment Policy (“RI Policy”) sets out its approach to identifying and managing environmental, social and governance (“ESG”) factors in both investment and portfolio management processes. The RI Policy was first developed in 2012 and was last revised in 2021. The Head of ESG is responsible for the implementation of the RI Policy and the relevant fund manager has overall responsibility for the ESG Programme. Triton expects each portfolio company board to take full responsibility for implementing the ESG Programme in their business. Portfolio company boards designate responsibility for ESG agenda delivery to members of their management team, who are supported by the ESG Team.

Principal adverse impact assessment methodologies

As part of the investment decision-making process, all potential portfolio companies are reviewed for ESG risks and opportunities. The ESG Team apply their professional judgement to identify the principal adverse impact of every potential investment. This is supplemented by online screening to identify any adverse impact and negative media coverage. In addition, for Triton Mid-Market (“TMM”) and Triton Smaller Mid-Cap (“TSM”) funds, standalone ESG due diligence is conducted by third-party experts.

Triton rolled out formal ESG KPI reporting in 2016 to track how its activities impact the environment and the communities in which its portfolio companies operate. In 2020, these indicators were reviewed to align with Triton’s external and internal materiality assessment. This systematic annual reporting allows us to track improvements during Triton’s ownership and identify and prioritise the management of material ESG risks and opportunities.

Portfolio companies are encouraged to conduct an appropriate materiality assessment to determine the probability of occurrence and severity of each adverse impact. As of 2020, this process is supported by a third-party software analytics platform that analyses relevant information available from public sources. The material topics identified help portfolio companies to recognise ESG issues, risks and opportunities in their ESG Action Plan.

Data sources

Under our private equity strategies, we collect relevant information directly from our portfolio companies through our online KPI reporting platform.

As our credit strategy is focused on minority positions in companies we do not control, we base our analysis on material adverse impacts on relevant sectors and complement this with company-specific information.

Engagement policies

Triton believes that better businesses will play a crucial role in a sustainable world and ESG is a critical element of Triton’s toolkit for building them. Triton has a structured, active ownership process, which aligns the expertise of the Chair, the CEO, the Investment Captain, and other senior executives. The process provides operational support for portfolio companies’ strategy, corporate governance, capital structure and supports them in managing their social and environmental impact.

Our engagement with portfolio companies begins with a comprehensive onboarding process. In the first year of ownership, Triton works with all portfolio companies to assign responsibilities for ESG management and develop an ESG Action Plan. We also introduce mandatory improvements to the ESG control environment, including the requirement to implement a minimum set of group-wide ESG-related policies.

Triton’s onboarding process for a portfolio company is followed by a detailed ESG Programme. Triton sets annual portfolio-wide ESG focus areas to drive improvement across the portfolio based on current relevant topics. For example, in 2021, these areas centred around energy consumption, carbon emissions, circular economy, health and wellbeing, safety, supply chain management, loss prevention, data protection and cybersecurity. In addition, we support portfolio companies in identifying relevant UN Sustainable Development Goals and setting associated targets.

Progress against each portfolio company’s specific ESG Action Plan, and its ESG Programme more generally, is closely tracked and appropriate adjustments are made when required. For example, several changes were made in 2020 due to the impact of the COVID-19 pandemic.

In 2019, Triton initiated an ongoing programme to encourage portfolio companies to identify the financial value created and protected through ESG improvements.

Specific approaches to climate-related risks and opportunities

During 2019, Triton developed a portfolio energy transition strategy encouraging portfolio companies to improve their energy and resource efficiency by implementing measures such as switching to renewable energy sources.

Triton supported its portfolio companies to assess relevant climate-related risks and opportunities in line with guidance from the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (“TCFD”). Portfolio companies are now implementing management actions arising from these assessments.

Another important part of this approach is Triton’s active membership of Initiative Climat International (“iCI”), a collective commitment to understand and reduce carbon emissions of private equity-backed companies and secure sustainable investment performance.

Most of our portfolio companies have now put in place an environmental programme and climate change will remain a key focus area. We are now focused on helping our businesses to identify opportunities to align with the EU Taxonomy for climate change mitigation and adaptation, whilst ensuring no harm is done to other environmental objectives.

ARTICLE 8 FUNDS DISCLOSURES

The description of the environmental or social characteristics of the funds we have self-certified as Article 8 funds can be found on the following section of our website:

Triton Fund V - SFDR ARTICLE 8 DISCLOSURES

Triton Smaller Mid-Cap Fund II - SFDR ARTICLE 8 DISCLOSURES

SFDR ARTICLE 8 FUNDS PERIODIC DISCLOSURES

¹ Triton Investment Management S.à r.l., Triton Investment Management Limited and any of their affiliates.

The United Nations’ (UN) Sustainable Development Goals (SDGs) set out a blueprint for a prosperous and sustainable world.

Triton believes that businesses have an important role to play in delivering positive social and environmental change. The SDGs help us to identify and prioritise our ESG activities and demonstrate measurable impact against our goals.

We have aligned our material ESG topics with the SDGs to which Triton and its portfolio companies can make the biggest contribution. These, including relevant SDG targets, are set out below.