Version: March 2021
This document sets out Cow Corner’s approach to the management of environmental, social and governance (ESG) issues, including the principles which Cow Corner aspires to and guidelines it has implemented in order to integrate these principles into its activities.
The ESG policy covers all existing portfolio companies as well as new acquisitions, all investment activities across the deal cycle, and Cow Corner’s own operations. All Cow Corner staff are required to adhere to the ESG policy.
Cow Corner is committed to investing responsibly
Cow Corner’s main objective is to generate attractive returns for its investors whilst at the same time creating long term value for its investments and their broader stakeholders in close collaboration with management. We recognize the impact that private equity investments may have on the environment and communities and it is our firm belief that we can reach our target returns in a responsible and sustainable way by maintaining best-in-class ethical standards. These ethical standards are an intrinsic part of our investment selection process.
Cow Corner is committed to investing responsibly on behalf of its investors and it is our strategy to:
- Incorporate ESG considerations into our investment analysis and decision-making processes by assessing ESG risks and management standards in target companies when evaluating investment opportunities
- Define an ambitious and sustainable ESG roadmap together with portfolio companies’ management and support them in improving ESG performance when necessary
- Be active owners, deeply involved through strong governance and hands-on operational engagement across our investments
Cow Corner recognises that ESG factors can have a considerable impact on the performance of our investments and believes we are responsible for appropriately mitigating identified ESG-related risks while also taking advantage of the opportunities generated in this regard.
Accordingly, we integrate ESG factors from the outset and as part of the decision-making process when analysing an investment opportunity. During, the holding period, Cow Corner engages and encourages portfolio companies regarding ESG requirements and ESG performance improvements.
At the firm and portfolio levels Cow Corner strives to make sure working environments are sound and employees’ health is safe, while also ensuring a workplace free of discrimination, intimidation and harassment. Together with management, Cow Corner seeks to ensure operations are conducted in a responsible, sustainable and ethical manner, in compliance with relevant legislations and regulatory requirements. Cow Corner is also committed to promoting equal opportunities and diversity principles.
Cow Corner is inter alia committed to principles according to the following guidelines:
UNPRI, UN Global Compact, and Invest Europe Code of ethics/compliance.
The objective of the policy is to ensure that Cow Corner and our portfolio companies structurally and systematically take material ESG issues into account in their operations in order to mitigate identified risks and also seize any ESG related opportunities such as:
- Services and brand differentiation based on ESG performance
- Human capital quality increasingly dedicated to sustainability and ESG matters
- Development of new business lines with improved and sustainable services contributing to local communities
- Reputational risk Licences to operate increasingly based on sustainability legislation Safety of operations and working environment
Cow Corner takes into account the following responsible ESG principles:
Respect ESG issues when investing:
Environmental: Respect the environment, promote sustainability with major factors being:
- Impact of materials: responsible use of scare resources
- Energy & CO2 footprint: reducing waste and emissions
- Eco system impact: obtain environmental permits, recycling
Social: Respect Human rights, ensure proper working conditions as well as occupational and product health/safety
Governance: Promote adequate and transparent corporate governance practices with focus on:
- Business integrity: proper governance, anti-fraud and anti-corruption policies
- Transparency: disclosure and reporting
- Supply chain control: suppliers ESG performance, transparent supply chains
Maintain high ethical standards:
- Comply with applicable local and international laws and regulations
- Respect the interests of the stakeholders’ universe including employees, local communities and business partners in line with standard business practices
Investment Process and Due Diligence
This ESG policy is available to the Investment Team and every Cow Corner employee. The portfolio companies we commit to and invest in are primarily responsible for the management of their ESG issues. Hence, we aim to select portfolio companies who are:
- Aware of the importance of ESG factors to their business performance
- Committed to developing and promoting best-practice sustainability standards
- Actively managing ESG issues within their business activities
When performing due diligence, the Investment Team is expected to form an opinion on all relevant ESG factors for the business under review. Cow Corner’s internal policies provide guidance with regards to industries and/or geographies not to invest in. During the due diligence phase and when appropriate, Cow Corner may appoint an independent external consultant to help in the assessment and identification of key ESG factors.
Cow Corner will not invest in:
Companies that derive income from controversial behaviour, i.e. not respecting Cow Corner’s ESG principles
Companies involved in controversial sectors such as:
- Wildlife products
- Companies generating substantial income in controversial countries, e.g. countries that are subject to UN, EU or US sanctions
When reasonably possible, Cow Corner will include adherence to the Fund’s ESG principles in the transaction documentation when making investments.
During the investment phase of our investment, different aspects of sustainability are addressed in meetings with portfolio management and we strive to continuously address identified ESG issues and opportunities and aim to put them on the agenda.
For some portfolio companies, an increased focus on sustainability may provide value creation potential in the medium term. Here, the sustainability of the offering and the potential for life-time extensions will be investigated, while also focusing on the efficient use of water, energy, the minimization of waste, the phasing-out and life-time extension of certain materials. In addition, innovative business lines could be developed, and other product/service cycles could be closed down. With some companies, the increased focus on sustainability provides a competitive advantage, in the awarding of tenders for example.
For most companies in the portfolio, due to Cow Corner’s services sector focus, sustainability is less relevant as their impact on the environment is limited. Nevertheless, these portfolio companies will continue to investigate their options to generate sustainable value in the long term.
For each portfolio company, progress is reported and monitored on defined action plans and ESG initiatives undertaken over the holding period. Cow Corner will always ensure portfolio companies have adequate resources to implement and improve on ESG matters and will guide and support the measurement of such matters. As a team, Cow Corner continues to work with its portfolio companies to share key learnings, best practices and recommendations and monitor the performance and risks of each portfolio company on an ongoing and increasingly systematized basis.
The governance of this policy
The Investment Team will review and, where necessary, update the ESG policy annually to reflect ongoing efforts to improve its ESG approach, as well as emerging requirements from stakeholders and evolving best practices.
Cow Corner will actively communicate the ESG policy to investment teams and will use the ESG policy as a basis to engage internal and external stakeholders on ESG management, as appropriate.