Introduction
Founded in 1988, Genstar has built a solid track record of helping middle market companies in targeted sectors flourish. We operate as one team with a single office in the heart of San Francisco. Our vision is to help build lasting, impactful businesses that will continue to succeed well beyond our ownership. Genstar has always considered itself an ethical, entrepreneurial, and action-oriented investor.
Genstar is a member of the American Investment Council (AIC) and Investment Adviser Association (IAA), both advocacy and resources organizations working with their members to contribute to the long-term grown of the US economy and private funds and investment advisers, by, among other things, promoting responsible long-term investment and seeking to improve responsible investing in the industry. Genstar became a signatory of the United Nations backed Principles of Responsible Investment (PRI) in 2015 as part of recognition that proper RI management mitigates risk and has a positive influence on long-term financial performance. The PRI framework guides our approach to incorporating RI issues into Genstar’s investment practices. In accordance with the PRI requirements, Genstar reports publicly on its responsible investment (RI) activities each year including the disclosure of its PRI Transparency Report (our latest report is available here).
RI Considerations
Genstar Capital believes that responsible corporate behavior with respect to RI factors can mitigate risk and additionally have a positive influence on long-term financial performance. Recognizing that the relative important of RI factors vary across industries, geography and time, Genstar’s consideration of RI factors is tailored to the particular investment and will vary according to the investment strategy of the particular fund. These RI factors relate to, but are not limited to, the following RI themes: climate change risks and opportunities; carbon footprint; environmental management; environmental footprint; corporate citizenship; health, safety, and well-being; corporate governance; cyber security and data protection; and supply chain management.
Investment Process
Genstar considers selected RI factors as part of the investment process. Considerations begin in the pre-investment phase and continue during ongoing monitoring of and engagement with portfolio companies. To the extent consistent with our fiduciary duties, our funds’ private placement memoranda, and our limited partnership agreements with our investors, Genstar’s investment process is based on guidelines that are principally consistent with the Guidelines for Responsible Investment developed by the AIC, the UN Guiding Principles on Business and Human Rights, the Ten Principles of the UN Global Compact, and the Financial Stability Board (FSB) Taskforce on Climate-Related Financial Disclosure recommendations.
Genstar seeks to identify relevant RI risks and opportunities as part of the due diligence process for each portfolio company acquisition. Potential investments are assessed against a range of relevant RI factors aligned with key international frameworks and industry standards. Our due diligence takes into account, to the extent applicable and available, information from the target company, third party information and data, third party standards and guidance and stakeholder engagement. During the due diligence process, the investment team, together with third party consultants, identify opportunities where policy development and/or implementation of RI initiatives would add material value to the portfolio company. At the conclusion of the due diligence process, our investment professionals share any material findings with the Investment Committee. The results of the RI due diligence assessment, including potential RI risk remediation plans, inform Genstar’s post-investment engagement process.
Following acquisition, we have a formal ongoing management and monitoring program for Genstar controlled private equity assets to mitigate RI risks and invest in RI opportunities throughout our ownership period. Our annual RI assessment identifies material RI topics for each portfolio company, and where applicable, the extent to which portfolio companies have minimized negative outcomes and improved positive outcomes. As part of this program, Genstar conducts monitoring of its portfolio companies, including collection of RI indicators. Our portfolio companies measure and report on their carbon footprint each year. Genstar leverages third party consultants to support its portfolio companies with identifying major sources of emissions and making recommendations for ways to reduce their emissions.
Investor Relations & Reporting
Genstar is dedicated to transparency in the reporting to our investors of our RI process, its implementation and results subject to availability and reliability of relevant data allowing for such reporting. Genstar is committed to keeping investors updated with respect to RI progress, significant milestones achieved, and goals for the future.
Genstar RI Process
Our RI Committee monitors this policy (this “RI Policy”) and the Genstar RI process. The RI Committee includes senior investment professionals, management and compliance. The RI Committee will at least annually review this RI Policy and the effectiveness of our related procedures, and will recommend modifications as it determines to be appropriate.
The culture at Genstar encourages collaboration, authentic relationships, transparency and accountability such that this Genstar RI Policy is embedded in the Genstar RI process. Genstar is committed to volunteering as a team through contribution and effort towards disadvantaged groups, and internally making value adjustments to our carbon footprint.
All Genstar employees will attest to this RI Policy annually. Genstar personnel receives periodic training on the implementation of this RI Policy, as needed.
EU Sustainable Finance Disclosure Regulation
The consideration of RI risks by employees is important in the advancement of a career at Genstar. Genstar is keen to ensure that all employees are fully aligned with this RI Policy and adherence to this RI Policy will be considered in every individual’s performance assessments. Such performance assessments will be linked to and impact the remuneration of employees.
Genstar does not currently consider the principle adverse impacts of investment decisions on sustainability factors (“PAIs”) within the meaning of the EU Sustainable Finance Disclosure Regulation (“SFDR”). Whilst RI considerations are integrated into Genstar’s investment process as outlined herein, the detailed rules underlying the SFDR would require Genstar to commit to gather data in line with the minimum PAI requirements of the SFDR, which is currently not practicable due to limited and scarce data being available. The position will continue to be monitored and reviewed by Genstar as interpretation of the underlying rules crystallizes and market practice becomes apparent.
