Responsible Investing Policy

We are committed...

Key Capital Partners (“Key”) recognise the importance of responsible investing and is committed to delivering long-term sustainable value. We have developed this policy which outlines our approach and commitment to responsible investing as part of our wider sustainability strategy.

Oversight

James Hall, Managing Partner, leads Key’s overall ESG strategy and approach however, the wider ESG team, including Matt Tice, Hannah Kirkup and Sandeep Banga support James on a day-to-day basis.

This policy has been developed by the ESG team as a collective and has been discussed and formally approved by the Key board. Each individual in the firm is informed of this policy and is aligned with the firm’s responsible investing approach. This policy will be reviewed and adapted annually or sooner should the need arise.

Environmental, Social and Governance (“ESG”) initiatives

Environmental

We are committed to minimising our environmental impact and contributing to a sustainable future in the collective aim of reducing climate change. This is addressed by:

  • Complying with applicable environmental laws and regulations.
  • Monitoring and working to minimise energy consumption and carbon emissions.
  • Reducing waste and optimising the use of recycling services.

Social

We are focused on promoting and instilling social responsibility and ethical practices throughout the organisation by:

  • Implementing policies and programmes which promotes the well-being of employees.
  • Fostering a culture of diversity, equality and inclusion.
  • Upholding human rights and implementing policies to address any violations that may occur.

Governance

We enhance the governance of our portfolio companies through:

  • Structuring the senior management team with a diverse range of experienced and skilled individuals.
  • Implementing monthly, structured board meetings.
  • Ensuring our portfolio companies have clear strategic goals and accountability.

Approach to sustainable investing

We integrate ESG considerations into all our investment analysis and decision-making processes across the firm, including during new investment appraisals, portfolio management and exit planning.

We seek to identify investments that align with our firm’s values and evaluate their ESG risks and opportunities based on their environmental impact, social responsibility and governance practices. Potential investments are appraised for systematic sustainability issues, with a focus on wider global environmental and social matters:

  • Environmental – we consider the supply chain, carbon emissions and any carbon offsetting initiatives to fully understand overall environmental impact and mitigate potential risks which may arise as a result.
  • Social – all potential investments are appraised for any legal claims including unfair dismissals and we assess their general reputation as an employer. We also consider the impact that the business may have on the communities in which they operate. Specific focus is given to the Modern Slavery Act and Diversity & Inclusion (D&I).

All investment decisions across the firm are discussed with the Investment Committee (“IC”) formally at least three times, ensuring that short-term decisions favouring financial performance are not prioritised ahead of responsible investing.

The committee specifically considers the sustainability risk of any downfalls that could cause a potential material negative impact of the value of the investment. Additionally, where any gaps against the above standards are identified prior to any investment, we will require commitment from the company to implement measures to fulfil the requirements as part of the post investment 100-day plan.

Stewardship and portfolio management

Key invests in a variety of businesses in the UK SME market on behalf of its investors and as stewards of our investors’ capital, we have a responsibility to work with our investee companies to promote responsible business practices and mitigate ESG risks to maximise overall value to investors.

Key hold a non-executive board seat in each portfolio company, so we have direct influence, oversight and regular engagement with management teams of investee companies. We work proactively with and encourage our portfolio companies to adopt and implement ESG policies and best practices throughout their business and provide them with the necessary resources and support to do so.

We monitor and assess the performance of our portfolio against a set of ESG KPIs. Management teams are responsible for reporting on these KPIs which are then discussed at board meetings, identifying key outcomes and priorities. We work with management teams to deliver improvements on these KPIs, ensuring conflicts of interest are appropriately identified and mitigated.

Our portfolio companies are required to report any ESG related incidents to us in line with reporting guidelines. Additionally, our ongoing ESG risk assessment of our portfolio companies identifies areas of increased risk which require greater focus. This allows us to prioritise where appropriate.

Exclusions

Key do not invest in companies whose business activity is substantially comprised of:

  • Illegal economic activity
  • Tobacco, distilled alcoholic beverages and related products
  • Weapons or ammunition
  • Casinos or equivalent enterprises
  • Internet gambling and online casinos
  • Pornographic
  • Illegal entry into or downloading of electronic data

Political engagement

Any political engagement which we undertake will be done so following discussion with and approval by the Key board. We would only carry out political engagement which we believe to be in line with existing regulations and best practices, and which we believe will lead to well-informed, inclusive and effective public policy decisions, contributing to a sustainable economy and minimising systematic sustainability risk.

Six Principles for Responsible Investment

We are a signatory of the UNPRI and have adopted the following six principles across our investment activities:

1

We will incorporate ESG issues into investment analysis and decision-making processes.

2

We will be active owners and incorporate ESG issues into our ownership policies and practices.

3

We will seek appropriate disclosure on ESG issues by the entities in which we invest.

4

We will promote acceptance and implementation of the Principles within the investment industry.

5

We will work together to enhance our effectiveness in implementing the Principles.

6

We will each report on our activities and progress towards implementing the Principles.

Conclusion

Responsible investing is central to our day-to-day practice and we are proud of our impact to date. We are continually seeking ways to improve policies and procedures in line with the latest ESG guidelines and developments.