Purpose

1. Cabot Square Capital LLP (“Cabot”) has long recognised that environmental, social and governance (“ESG”) issues can have a significant impact on value creation during the period in which we hold our investments. For this reason, we have adopted the following ESG policy.

Our Sustainable Investing Principles

Cabot is a signatory to and supports the UN Principles of Responsible Investment (www.unpri.org). In addition, we are committed to:

1. Comply with relevant regulations governing the protection of human rights, occupational health and safety, the environment, and the labour and business practices of the jurisdictions in which we conduct business.
2. Adhere to the highest standards of conduct intended to avoid even the appearance of negligent, unfair or corrupt business practices.
3. Regard implementation of our ESG engagement activities as an integral part of how we do business.
4. Appoint a Head of Sustainability and provide for the assignment of and accountability for ESG responsibilities to senior managers at companies we control – in this regard, Cabot has appointed Stephanie Wilde as our Head of Sustainability.
5. Instruct Cabot Investment Professionals in the identification and management of ESG risks and opportunities and provide them with appropriate support and assistance.
6. Identify ESG risks and opportunities prior to the acquisition of investee companies and actively manage ESG risks and opportunities following acquisition.
7. Establish appropriate ESG policies and practices for investee companies.
8. Recognise that our ESG activities are of an ongoing nature and to encourage continual improvement in ESG performance at investee companies.
9. Distribute this policy and related ESG information to all Cabot members and employees.
10. Encourage dialogue on how we can accommodate ESG issues in a way that is consistent with our Limited Partners’ and other stakeholders’ initiatives in these areas.

Cabot’s commitment

As part of our commitment to ethical and responsible investing, Cabot has been a signatory to the UN Principles for Responsible Investment since 2021.

As part of our commitment to sustainability, Cabot targets progress being made toward the 17 Sustainable Development Goals as laid out by the United Nations both prior to investment and throughout its ownership cycle.

As part of our commitment to advancing diversity, equality and inclusion in the private equity industry, Cabot has become a signatory of the ILPA Diversity in Action initiative in 2022.

How is this policy implemented?

Investing sustainably is embedded in every stage of the investment lifecycle, from origination of new investment opportunities through to eventual exit from an investment.

1. Pre-Investment Screening and Excluding Investments Policy

   Cabot does not invest in entities deriving revenue from the following activities:

   1. The manufacture of sale of controversial weapons (antipersonnel mines, cluster bombs, nuclear, chemical, or biological weapons)
   2. The manufacture or sale of tobacco products
   3. The manufacture of sale of illicit drugs
   4. Coal mining
   5. Oil or gas exploration or production
   6. Other activities that are illegal in the jurisdiction in which they are located, pursuant to applicable laws.

   Further to this, we screen potential investments against criteria that include a broader consideration of activities in sectors that present especially elevated ESG risks. Investment in these activities requires special consideration as to whether associated societal harms are being mitigated prior to investment and the Investment Committee should be consulted before any opportunity to invest is pursued.

   1. Manufacture or sale of weapons
   2. Generation of nuclear power
   3. Manufacturer of sale of alcoholic beverages or legal recreational drugs
   4. Provision of gambling services
   5. Adult entertainment
   6. Privately operated correctional facilities

2. Due diligence and the investment decision

   Investment teams are required to identify material ESG risks and opportunities by completing the pre investment ESG risk assessment for every deal, setting out how the relevant risks will be managed post acquisition. We also identify areas for positive impact and potential negative impacts on broader stakeholders during due diligence.

   Before making any investment, the ESG considerations relevant to that investment are considered by the Investment Committee as part of their overall deliberations as to whether the investment is made.

3. Post-investment Ownership Phase

   After an investment decision is made, Cabot’s process for engaging with the investee company consists of an onboarding period, agreeing an ESG Strategy and Action Plan which is then revisited and refreshed annually with company management.

   Cabot also runs a regular ESG forum where all portfolio companies are able to meet to share ideas and discuss better understand relevant ESG topics.

4. Strategy and ESG Action Plan

   Working with management, a strategy is developed to address the material risks and opportunities identified through our investment due diligence. The strategy also aims to maximise positive impact and minimise negative impact on the environment and society, aligning with the applicable UN Sustainable Development Goals.

   As part of the wider value creation programme, we agree with company management a specific annual ESG Action Plan, backed with specific targets and metrics where possible.

5. Monitoring

   Each year, we support the investee companies in reviewing performance and updating their annual action plans. We provide feedback and seek to address any issues that come to our attention.

   In addition, we collect standard data across the portfolio on diversity and inclusion, and greenhouse gas emissions to support our investors in their own decision making.

   We report quarterly, and at our AGM, on progress on ESG matters across the portfolio.

6. Exit

   While stakeholders will reap benefits before, during and after ownership by a Cabot fund, it is at exit that we will seek to maximise the financial value of the ESG programme for investors through a higher exit price and, as far as possible, ensure that established good practice will continue under the future owner.

Approval

This policy has been approved by the Cabot ESG Committee and is to be reviewed and updated as required.