Article 3 (2019/2088) – Transparency of Sustainability Risk Policies
Deerpath Capital Management, LP (‘’Deerpath’’) has implemented an Environmental, Social and Governance (‘’ESG’’) Policy & Procedures document that details how Deerpath considers ESG and sustainability risks within the investment process. Further details on this process can be found on our website, while the full policy is available on request.
Article 4 (2019/2088) – Transparency of Adverse Sustainability Impacts at Entity Level
Deerpath does not currently consider the adverse impacts of investment decisions on sustainability factors. The investment manager has taken this approach due to the range of investments made relative to the size of the internal organization, and the ability to receive reliable data. Deerpath will reassess the consideration of adverse impacts on an annual basis.
Article 5 (2019/2088) – Transparency of Remuneration Policies in Relation to the Integration of Sustainability Risks
Deerpath’s remuneration policy details that employees are rewarded on several factors. For employees responsible for investment decisions, one of the factors that influences remuneration is the investment performance of the portfolio. Deerpath firmly believes that appropriate integration of ESG and sustainability information can help identify risks and opportunities and therefore help generate and maintain strong financial investment performance.
Article 23 (2022/1288) – Website Section for the Disclosure of Sustainability-Related Information about Financial Products
|No sustainable investment objective||Deerpath promotes environmental and social characteristics but does not have sustainable investments as an investment objective.|
|Environmental or social characteristics of the financial product||The environmental and social characteristics promoted by the product vary depending on the materiality risks for the company that Deerpath invests in.
Environmental characteristics include the investee company’s focus on carbon emissions disclosures and reduction targets.
|Investment strategy||Deerpath is a leading non-bank lender in the US lower middle market with a safety-first investment approach.
Deerpath approaches each investment as an opportunity to establish long term relationships with private equity sponsors, management teams and entrepreneurs. The firm leverages its extensive investment experience to offer flexible financing solutions to fit the needs of each company with competitive terms and structures.
|Proportion of investments||It is expected that 90%+ of investments in Deerpath’s portfolio at any point in time will be aligned with the promotion of environmental or social characteristics.
|Monitoring of environmental or social characteristics||Deerpath will associate the promoted environmental or social characteristics to those factors that are material to risk management at the borrower level. The characteristics that Deerpath seeks to promote will vary based on the underlying portfolio company. Deerpath will collect relevant environmental and/or social data from investee companies measuring material factors, which will include emissions related information. If appropriate, Deerpath will engage with borrowers and sponsors to support improvement plans. Such data and engagement will be used to monitor the attainment of improved environmental and/or social characteristics.|
|Methodologies||Data will be collected on an annual basis via a borrower survey that will ask borrowers to provide information on ESG factors that are material to their business.|
|Data sources and processing||Deerpath will collect data directly from borrowers through both direct due diligence and engagement with the borrower and more systematically on an annual basis via a borrower survey. The borrower survey will be managed by a third party specialised ESG software platform experienced in this activity, which tracks and presents the data in a consistent manner. Data will be assessed by the relevant borrower coverage team within Deerpath and evaluated in line with expectations. Where required, Deerpath will engage with the borrower.
Where data is missing Deerpath will not use estimates but will instead look to encourage further disclosures from the borrower.
|Limitations to methodologies and data||The availability and quality of data will likely vary across borrowers due to the maturity of each business and the resources available to measure and provide transparency into their relevant activities. This will not limit an assessment of the borrower’s exposure to specific sustainability-related risks. In addition, Deerpath will continue to promote environmental and/or social characteristics with the borrowers and promote disclosure around material issues including carbon emissions.|
|Due diligence||The investment approach for Deerpath is one of fundamental due diligence on each borrower with additional support by the owner (typically a private equity sponsor). Deerpath views ESG considerations as another lens through which to understand the risks and opportunities that a company faces and impact on their ability to repay their loan. An assessment of governance is critical and a key part of the ESG due diligence process to ensure that good governance practices are in place when Deerpath lends.|
|Engagement policies||Deerpath will engage with borrowers to promote the management of material environmental and/or social risk factors. Where sustainability focused issues are identified, deal professionals will engage directly with the borrower and its private equity sponsor owner to rectify the issue.|
|Designated reference index benchmark||Deerpath does not have a designated reference index benchmark for the purpose of meeting the environmental or social characteristics promoted by the fund.|