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TCFD REPORT

Stonebridge Capital’s climate-related disclosure

About this Report

The time has come where environmental, social, and governance (ESG) components pose a significant impact on the asset values. Undoubtedly, climate change is one of the defining issues that may have repercussions on the long-term returns of the companies we invest in. To this end, Stonebridge Capital integrates climate considerations into its operation and the investment process. 
 
In 2022, our effort was extended to expressing support for the Task Force on Climate-related Financial Disclosures (TCFD)’s recommendations. On behalf of our clients, we will continuously reduce exposure to financially material climate risks and seek to share relevant information. 
 
We are pleased to present our inaugural TCFD report, which is structured in four content sections: governance, strategy, risk management, and metrics & targets. 

Our ESG Committee oversees sustainability issues such as:

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  • Climate change

  • Waste management

  • Labor environment

  • Diversity & Inclusion

  • Business ethics

  • Board

 

1. Governance

ESG Committee

In response to the mounting demand for strategic governance around sustainability issues, Stonebridge Capital has established the ESG Committee under the Board of Directors. The committee oversees ESG risks and opportunities (including climate change) that are material to our assets.

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The key responsibilities of the ESG Committee are as follows:

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  • Provide a yearly review of the Responsible Investment Policy consistent with the relevant laws and regulations

  • Review and approve the interim and long-term responsible investment strategy

  • Provide opinions on sustainability risks and opportunities of potential investments

  • Deliberate on the result of the investee companies’ ESG performance assessment

  • Convene regularly for in-depth discussions on matters related to responsible investing

 

ESG Team

Another key to our sustainability governance structure is the ESG Team, a functional group responsible for ESG integration. The team is tasked with the following duties to ensure that there is no discrepancy between our responsible investment policy and operation:

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  • Conduct extensive research on ESG topics including climate change and global responsible investing practices

  • Review ESG issues (including those related to climate change) of potential investments and ESG performance of investee companies

  • Prepare sustainability reporting and disclosures, including those that consider climate change risks and opportunities
     

2. Strategy    

Integration of ESG factors into the investment process

As a steward of our clients, we are charged with acting in the best interest of clients with due care. To this end, we strive to manage ESG issues material to our assets by factoring ESG considerations into the deal cycle

Pre-acquisition

Screening

We exclude investments in coal plants, coal mining or extraction as such business can accelerate climate change. 

ESG Due Diligence

We identify sustainability risks and opportunities of potential investments.

Holding Period

Performance Assessment

We periodically review performance of our investee companies and help set relating targets and metrics.

Engagement

We may engage with companies on their climate goals and take corrective actions where necessary. 

Exit

Performance Assessment

Detailed documentations of our investee companies’ ESG performance are made available for interested potential buyers.

3. Risk Management

Risk management

We identify and assess climate-related risks to our investments by leveraging our proprietary ESG research and assessment. Our professionals in the ESG team undertake rigorous research to understand the physical and transition risks of climate change, and the associated implications to our investments. With respect to physical risk, the focus is on fact-finding. The team regularly reviews publications relating to climate science and the impacts of extreme weather events. In terms of transition risk research, we pay close attention to regulatory changes and evolving clients’ expectations.
 
For climate-risk assessment of an individual company in our portfolio, we use a proprietary ESG performance assessment tool called ESG Survey. Every six months, our investment department sends out a survey, covering an array of ESG topics including climate change, to our buyout portfolio. After the retrieval of the survey, the investment department gives a primary review of the answers to identify existing or potential risks. Afterward, the result of the survey is delivered to the ESG team and later to the ESG Committee for secondary review and discussion.

4. Metrics and Targets

Our ambition to reduce operational and portfolio greenhouse gas emissions 

As an investment firm, we believe we can contribute to the goal of reducing greenhouse gas (GHG) emissions in two ways. On the firm level, our target is to foster the culture of conserving energy as energy consumption represents one of the most significant impacts of our operation to climate. We’ve also worked to encourage our staff to reduce business travel and take advantage of virtual alternatives where possible. On the portfolio level, our goal is to drive our investee companies’ progress on greenhouse gas management. Through ESG Survey, we ask if they measure GHG emissions and/or carry out activities to reduce the emissions. To companies not measuring emissions, we may ask them to set targets and/or metrics relating to GHG management. In the coming years, we will seek to devise a method to estimate absolute emissions associated with Stonebridge Capital’s AUM. 

Climate-related metrics

Beyond the target of reducing operational and portfolio level emissions, relating metrics were set. The metrics that we employ to track and monitor our progress towards the target are listed below.

Climate-related metrics

Firm-level 

  • Number of business travels in a year

  • Signed climate-related initiatives

  • Availability of climate-related disclosures

Investee company-level (if applicable)

  • GHG emissions (absolute, trend)

  • Carbon reduction target and strategy

  • Programs to reduce or offset GHG emissions

  • Signed climate-related initiatives

  • Renewable energy use 

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