Responsible Investment Policy & Procedures
This Georgian Responsible Investment Policy & Procedures (the “Policy”) sets forth the general principles, factors, considerations and processes in connection with Georgian’s responsible investment activities.
It is designed to provide guidance to Georgian Partners Growth L.P.’s (together with its affiliates, “Georgian”) principals, directors, officers, employees and consultants (“Georgian Personnel”) in connection with their review of and compliance with Georgian policies, procedures and general practices.
The Policy applies to all Georgian Personnel (as applicable). Unless otherwise indicated, this Policy does not apply to Georgian Limited Partners (“LPs”), vendors or portfolio companies (“portfolio companies” or “customers”) or their respective directors, officers, employees, consultants, advisors or vendors.
In developing their policies and procedures related to responsible investment and/or environmental, social and governance (“ESG”) practices, investment advisers may consider the United Nations Principles for Responsible Investment (“UNPRI” or “PRI”):
- Principle 1: Incorporating ESG issues into the investment analysis and decision-making processes;
- Principle 2: Being active owners and incorporating ESG issues into corporate ownership policies and practices;
- Principle 3: Seeking appropriate disclosure on ESG issues by the entities invested in;
- Pinriples 4: Promoting the acceptance and implementation of the Principles within the investment industry;
- Principle 5: Working cooperatively to enhance the effective implementation of the Principles;
- Principle 6: Reporting on corporate activities and progressing towards the implementation of the Principles.
Georgian has considered the material risks associated with responsible investment processes. Such risks may include:
- Georgian’s portfolio becomes subject to certain risks as a result of failure to consider the impact of ESG factors;
- Georgian’s Personnel fail to make appropriate disclosures or truthful statements about the ESG risks in the Georgian portfolio and/or Georgian ESG practices;
- Georgian misses significant opportunities out of a failure to consider the growth industries associated with ESG; and
- Georgian suffers reputational damage for failure to develop an ESG investment strategy.
Georgian has established this Policy to mitigate these risks.
Policy & Procedures
Georgian is a signatory of the UNPRI, which sets forth an aspirational set of guidelines that promote the incorporation of ESG policies and procedures. Georgian endeavors to conduct its investment activities in accordance with the UNPRI’s six principles and, where appropriate, to encourage portfolio companies in which Georgian is invested to consider sustainability factors (material ESG focus areas, herein “ESG factors”) in their activities.
By considering ESG factors in its investment decision-making, Georgian aims to identify opportunities and risks that may have a material impact on the long-term performance and sustainability of its portfolio companies and funds in general.
Georgian will consider ESG factors during the investment decision-making process and the ongoing monitoring and management of investments, but generally, ESG factors are not the primary drivers that would determine investment decisions. As a result, a Georgian fund may make investments that do not demonstrate strong ESG performance at the time of or during the investment.
This Policy sets forth the following:
- an overview of Georgian’s Responsible Investment Policy and program;
- the ESG factors that Georgian may consider in connection with its investment activities;
- Georgian’s consideration of ESG factors pre-investment in a company;
- Georgian’s consideration of ESG factors post-investment in a company consistent with stewardship activities; and
- the general monitoring and reporting procedures intended to support compliance with Georgian’s responsible investment policy.
Overview of Georgian’s Responsible Investment Policy and Program
The Head of Purpose and ESG at Georgian is responsible for overseeing, executing and supporting this Policy. The Head of Purpose and ESG will seek to ensure that the Policy is modeled on the leading industry standards, and that Georgian is able to measure and report compliance with this Policy in a consistent, comparable and transparent manner. The Head of Purpose and ESG will also review and approve information about this Policy and Georgian’s ESG program in general, including materials that may be publicly or externally disseminated, in consultation with Legal, Compliance and Finance (as applicable). Such materials may include information about Georgian’s ESG program and sustainability-focused initiatives such as:
Annual Purpose Report: Since 2019, Georgian has publicly shared progress updates, data and information about its sustainability-focused initiatives on an annual basis.
Industry Associations & Commitments: As signatories of UNPRI and members of the ESG Data Convergence Initiative (EDCI), Georgian provides qualitative and quantitative responses on its operations, investment practices and the ESG performance of its portfolio.
Stakeholder Reporting: Generally, Georgian may provide information about ESG data and respond to reporting requests about its investment process and its portfolio companies from its stakeholders, such as limited partners and prospective limited partners.
ESG factors that Georgian may consider in connection with investment activities
As business-to-business (“B2B”) software investors, who invest in predominantly growth-stage enterprise software and software-as-a-service (“SaaS”) companies, Georgian has identified a select number of material ESG factors that it may consider both in evaluating a potential company for investment by a Georgian fund and monitoring and providing support to a portfolio company post investment by a Georgian funds.
- Social Factors
Diversity, Equity & Inclusion: Georgian may consider a company’s commitment to tracking, reporting and considering employee self-identification data in support of talent strategy and workforce planning in connection with inclusive and equitable talent attraction and talent management practices. Key diversity, equity and inclusion topics may include: board diversity, leadership diversity, diversity, equity and inclusion (“DEI”) policy implementation, talent pipeline diversity, overall workforce representation and turnover by employee demographic group.
Labor Standards: Georgian may consider a company’s compliance with laws and regulations pertaining to safe and equal workplace practices and human rights practices related to outsourcing and subcontracting work. Key labor standards topics may include: workplace health & safety, policy implementation pertaining to anti-harassment, anti-discrimination, parental leave and equitable compensation.
- Governance Factors
Corporate Governance: Georgian may consider a company’s policies and practices around laws and regulations pertaining to ethical conduct and anti-corruption. Key corporate governance topics may include: policy implementation on key issues such as codes of ethics and conduct, anti-bribery and corruption, cybersecurity and privacy, employee policy attestation and training, incident reporting and management of employee complaints.
Cybersecurity: Georgian may consider a company’s policies and practices around adoption of and compliance with relevant cybersecurity standards and protocols intended to mitigate cyber-related risk. Key cybersecurity topics may include: board-level metrics and reporting on cyber-related risk, cybersecurity certification and controls, incident response procedures, and annual employee training on cybersecurity.
Board Dynamics: Georgian may consider a company’s commitment to and practices around board diversity and engagement. Key board of directors topics may include: board composition and board social diversity, board reporting on sustainability topics, including overall ESG topics, cybersecurity-related risk and climate risk.
- Environmental Sustainability Factors
Greenhouse Gas Emissions: Georgian may consider a company’s approach to carbon emissions, which includes the estimation of greenhouse gas emissions. Key greenhouse gas emissions topics may include: Scope 1, 2 and 3 emissions, energy consumption and energy intensity.
Environmental Initiatives: Georgian may consider a company’s contributions to environmental initiatives such as waste management and energy efficiency towards overall environmental sustainability. Key environmental initiatives may include: energy consumption, renewable energy sourcing and energy efficiency.
Pre-Investment: Responsible Investment Considerations
Georgian may consider ESG factors in connection with conducting diligence on a potential portfolio company in an effort to identify attractive investment opportunities and mitigate potential sustainability risks. Sustainability risks refer to events and/or conditions that may pose adverse impacts on ESG performance, which may negatively affect the long-term value of an investment. Generally, Georgian may undertake the following steps as part of its process prior to investing in a portfolio company:
Negative Screening: As B2B software investors that prioritize enterprise solutions, and have limited exposure to industrial and/or consumer technology, Georgian does not typically encounter investment opportunities in commonly recognized restricted sectors, such as fossil fuels, weapons manufacturing, pornography, tobacco, alcohol and cannabis, etc. In certain cases, Georgian’s fund documents may include restrictions on sectors for investment.
Pre-Investment ESG Diligence: Generally, during the early stages of the investment process of a company, Georgian’s investment team will conduct a qualitative ESG assessment, which considers material ESG factors pertaining to corporate governance and compliance, social and human rights, and environmental sustainability. The investment team typically evaluates the potential investment based on these factors and includes this evaluation in materials for consideration by the Georgian investment committee.
Closing ESG Diligence: Prior to closing on a transaction, the Georgian investment team initiates a quantitative and qualitative assessment of the potential investment’s ESG status and development by issuing the Georgian ESG Survey.
Georgian then reviews a company’s responses to the ESG Survey data and any related materials (e.g., policies and procedures) and prepares a final ESG report.
Prior to or around closing, Georgian’s Head of Purpose and ESG begins engagement on ESG topics with the intended Georgian board representatives and the company in an effort to try to support the company on further developing its ESG program (as applicable).
Post-Investment: Engagement & Active Ownership
Post-investment in a company, Georgian endeavors to undertake the following active ownership approaches, which are informed by the UNPRI’s principle on stewardship:
Board Representation and Oversight: Georgian board directors will seek to influence portfolio companies to consider relevant ESG factors pertaining to their business and strategic context.
ESG Survey: On an annual basis, Georgian encourages its portfolio companies to participate in the Georgian ESG Survey on a voluntary basis. Georgian evaluates and considers the responses of participating companies on an aggregate basis, year-over-year, and also develops a customized ESG performance report for participating companies on an individual basis. With respect to the latter, this confidential report discusses potential ways a company may be able to further develop its ESG-related management practices.
Strategic Guidance & Support: Georgian seeks to engage with portfolio companies regarding information received through the Georgian board representation, findings during the diligence process, responses to the Georgian ESG Survey (if applicable) and and to offer support to address potential sustainability risks. Examples of support may include: access to subject matter advisors and resources such as workbooks, specialized webinars, and training on relevant ESG topics.
Benchmarking and Collective Action: On an annual basis, Georgian endeavors to develop proprietary benchmarking and portfolio-level ESG performance insights by aggregating and analyzing self-reported portfolio company data obtained through the diligence process, the Georgian board role, and the ESG Survey. Georgian summarizes aggregate results and highlights potential sustainability risks or value creation opportunities.
Monitoring and Reporting
Compliance will monitor the foregoing periodically, not less than annually, confirming the following:
- the Policy was complied with, particularly with respect to new transactions and monitoring portfolio companies post-investment;
- the Policy aligns with other Georgian policies and procedures on matters such as conflicts of interest, advertising and marketing, insider trading (as applicable); and
- the Policy is reviewed and/or updated in accordance with the time period set forth herein and updates to the Policy were adopted by the Georgian Steering Committee and made available to Georgian Personnel.
Effective Date: August 31, 2023