Responsible investment policy

Causeway Capital invests in private SMEs in Ireland and the UK with excellent growth potential. We aim to deliver strong risk-adjusted investor returns, while fulfilling our duty to act responsibly and drive progress on environmental, social and governance (“ESG”) matters. We have an entrepreneurial approach to portfolio management and seek to accelerate growth through direct equity investment and hands-on management support.

We support the businesses we invest in to consider what is right for all stakeholders, be they employees, customers, suppliers, shareholders, the environment and wider society. As a private equity investor we want to ensure that it is not simply capital we deploy but that we use our voice to encourage ambition in the board room and support any changes and improvement required.

In August 2018 Causeway Capital became a signatory of the United Nations Principles for Responsible Investment (“UNPRI”). The UNPRI is a globally recognised voluntary framework concerned with the incorporation of ESG considerations into the investment analysis, ownership and decision-making processes and as a signatory, we look to integrate the UNPRI’s six principles for Responsible Investment within our investment processes.

Our Approach

We have always considered ourselves to be a responsible investor and recognise our fiduciary duty to all stakeholders in our investments. Causeway Capital defines ESG evaluation as:

“a process of the identification of potentially material sustainability opportunities and/or risks that could positively or negatively affect an investment made by any of its funds.”

ESG issues impact the communities where Causeway Capital and our portfolio companies operate. As a fund manager, Causeway Capital recognises this and is committed to assessing and managing material ESG risks in its decision making, both in relation to pre-investment diligence and portfolio management. Example ESG considerations include:

Where we are invested in a company, there is a real opportunity, and a responsibility, to make a positive difference. This policy is to formalise our long-term commitment and approach to responsible investing to ensure ESG issues are actively managed as a clear priority at Causeway Capital, and to encourage board level engagement and ownership for these issues within our portfolio companies.

We do not expect that all of our portfolio companies will necessarily meet all of the minimum standards immediately following our investment. However, we do expect the executive management team to be fully committed to meeting the minimum standards within a reasonable timeframe and Causeway will support them to do so.

Our policy is, to the best of our ability, to:

• Comply with all relevant regulations and best practice, at General Partner (“GP”) level and at our portfolio companies, in the countries in which we operate

• Manage and minimise our own direct ESG impacts at a GP level

• Integrate ESG considerations into all stages of the deal cycle, namely:

  • pre-investment / diligence phase: consideration of diversity, labour standards, energy efficiency savings, recycling and use of natural resources and pollution control, specific due diligence exercise to identify and understand ESG risks and opportunities

  • post-investment / ownership phase: include ESG as part of 100-day plans and any key ESG risks and opportunities are addressed by management, monitoring performance using our ESG scorecard

  • exit phase: recognising the long-term value added by ESG initiatives, include ESG factors in vendor due diligence

• Encourage portfolio companies to consider and address all ESG issues relevant to their business, with the aim of delivering continuous improvement

• Track and report progress of ESG initiatives at portfolio companies. We include an ESG section and scorecard in our quarterly and annual reporting to Limited Partners (“LPs”)

• Engage with relevant industry bodies (eg. The BVCA)

• Commit not to invest in companies whose primary business activities involve: manufacturing, distribution or sale of arms or ammunition, gambling, pornography, tobacco, or other vices. We will not invest in companies that fail to meet minimum international human and labour rights standards

People engagement and education on best practice

ESG is a standing board agenda item at all our portfolio companies where Causeway Capital engages through our board representative. Where investee companies establish ESG board sub-committees, Causeway Capital will join as a full member.

We have engaged with external consultants and experts specialising in ESG best practice. As part of that engagement, we intend to engage with and educate our people, both at the GP and at portfolio management level, to ensure everyone is aware of latest trends and best practice.

Scope

This Policy applies to all Causeway Capital staff, across all our funds.

Policy Background

This Policy has been in effect since July 2018 and is reviewed annually by the Causeway Capital Investment Team.

Last reviewed:            January 2023

Next review date:       January 2024

Sustainability-related disclosures

The EU's Sustainable Finance Disclosure Regulation (SFDR) requires fund managers like Causeway Capital (as a registered AIFM) to provide sustainability-related disclosures on our website and in our product documentation. These disclosures are intended to improve transparency and comparability for current and potential future investors with regards to the integration of sustainability considerations, revealing the true sustainability of fund managers with the goal of increasing capital flows to those demonstrating strong integration of sustainability considerations. Please refer to the disclosures here

 Principles for Responsible Investment

In August 2018, Causeway Capital became a signatory to the United Nations Principles for Responsible Investment (PRI). PRI is a globally recognised voluntary framework concerned with the incorporation of ESG considerations into the investment analysis, ownership and decision making processes. As a signatory, we aim to integrate the PRI’s six principles for Responsible Investment within our investment processes.