ARX EQUITY PARTNERS ESG POLICY
ARX takes its role as a member and active participant in the Central European business community seriously from the perspectives of social responsibility and business ethics. ARX encourages its team members and portfolio company mangers to act in a socially responsible manner, in an effort to contribute to the social and environmental sustainability and development of the region. There are certain sectors that the firm views as socially irresponsible (for example gambling, tobacco production, etc.) where ARX will never invest regardless of whether any investor restrictions or policies contain formal restrictions. With respect to business ethics, ARX does not engage in corrupt or unethical practices. ARX systematically avoids companies and / or sectors where corruption is endemic.
ARX has long recognized that ESG issues can have a significant impact on private equity investment, in terms of raising funds, making investments, managing investments and creating value in each portfolio company. Moreover, ARX believes that effectively addressing ESG issues has the potential to positively impact financial returns.
The purpose of creating an ESG policy is to define ARX’s approach to integrating the consideration of ESG risks and value creation opportunities into investments made through its managed private equity funds. ARX commits to consider material ESG issues in the course of its due diligence and in the monitoring of portfolio investments to the extent reasonably practical under relevant circumstances.
In developing our ESG policy, we have given consideration to a range of codes and standards, including the United Nations supported Principles for Responsible Investment (PRI).
United Nations-backed Principles for Responsible Investment (UN PRI)
ARX became a signatory of the PRI in November 2014. The PRI works with its international network of signatories to put the six Principles for Responsible Investment into practice. Its goals are to understand the investment implications of ESG issues and to support signatories in integrating these issues into investment and ownership decisions.
We believe that by agreeing to the below principles we are publicly confirming our desire to incorporate environmental, social and corporate governance issues in our investment management operations. The six PRI principles listed below provide a framework that incorporate ESG issues into investment decision-making:
- ARX will incorporate ESG issues into our investment analysis and decision-making processes.
- ARX will be active owners and incorporate ESG issues into our ownership policies and practices.
- ARX will seek appropriate disclosure on ESG issues by the entities in which we invest.
- ARX will promote acceptance and implementation of the Principles within the investment industry.
- ARX will work together to enhance our effectiveness in implementing the Principles.
- ARX will each report on our activities and progress towards implementing the Principles.
ARX ESG Policy Statement
ARX aims to:
- Comply with relevant regulations governing the protection of human rights, occupational health and safety, the environment, and the labor, and business practices of the jurisdictions in which we conduct business.
- Consider environmental, public health, safety, and social issues associated with target companies when evaluating whether to invest in a particular company or entity, as well as during the period of ownership.
- Instruct ARX investment professionals in the identification and management of ESG risks and opportunities, and provide them with appropriate support and assistance.
- Regard implementation of our ESG engagement activities as an integral part of how we do business.
- Grow and improve the companies in which ARX invests for long-term sustainability and to benefit multiple stakeholders, including on environmental, social, and governance issues. To that end, ARX will work through appropriate governance structures (e.g. board of directors) with portfolio companies with respect to environmental, public health, safety, and social issues, with the goal of improving performance and minimizing adverse impacts in these areas.
- Use governance structures that provide appropriate levels of oversight in the areas of audit, risk management, and potential conflicts of interest, and to implement compensation and other policies that align the interests of owners and management.
- Identify ESG risks and opportunities prior to the acquisition of companies entrusted to our care and control, and manage ESG risks and opportunities following acquisition.
- Encourage ARX portfolio companies to advance these same principles in a way that is consistent with their fiduciary duties.
- Adhere to the highest standards of conduct intended to avoid even the appearance of negligent, unfair or corrupt business practices.
- Be accessible to, and engage with, relevant stakeholders either directly or through representatives of portfolio companies, as appropriate.
- Encourage dialogue on how we can accommodate ESG issues in a way that is consistent with our investors and other stakeholders initiatives in these areas.
- Recognize that our ESG activities are of an on-going nature and to encourage continual improvement in ESG performance at the companies we own.