Foresight : Introducing Our Approach To Sustainable Investing

IMPACT and ESG

4 September 2023

There is a lot of language used in this area - this is what it means in Foresight Private Equity

Firstly, what is Sustainability?

Meeting the needs of the present without compromising the ability of future generations to meet their own needs. Foresight supports this by

investing responsibly in businesses that commit to delivering impact and ESG improvements

What does delivering impact and ESG improvements mean?

What is Impact?

What is Environmental, Social, Governance?

We pursue impact themes aligned to the objectives of the UN Sustainable Development Goals; which strive for the universal reduction of poverty and environmental harm, and the improvement of education, health, and economic growth. We have four Impact Themes focused on small companies, and we select impact metrics for each investee that we can measure & improve

ESG is the reporting of data across environmental (e.g. carbon emissions), social (e.g. health & safety) and governance (e.g. board diversity) categories. We have our Five Principles Approach, which we use to measure and improve the ESG performance in accordance with increasingly standard practice

What does Sustainable Investing mean in Foresight?

We partner with commercial businesses aligned to our impact themes and support them in maximising their positive impact

We incorporate ESG diligence & considerations into our investment decision making process, and play an active influencing role in delivering

value enhancing improvements during our period of ownership

We invest across four impact themes, and select customisable impact metrics for each investee

Foresight Impact Themes

Quality employment	Research & Innovation
at scale	Investing in technological breakthroughs
Creating jobs, fair and	and future
value creation
decent working conditions for all

	Sustainable, inclusive,
Health	local infrastructure and
Making healthcare more	the environment
accessible and human wellbeing more	Improving the way we live and move
inclusive
around whilst reducing
	environmental harm

Sample Impact Metrics

• Total number of employees (FTEs)
• Number of well paid jobs
• Number of successful apprenticeships
• Amount spent on research and development

▪ R&D as a percentage of revenue ▪ New products released to market

• Patents secured
• Number of medical facilities using the company's products
• Number of individuals benefitting from the company's products
• Value or volume of medical research supported/conducted by the company
• Volume of local infrastructure supported

▪ Volume of environmental/CO2 reducing product sold

• Number of individuals receiving education/benefitting from the company's products or services

A Foresight framework for companies to evaluate, monitor and improve ESG standards over time

Five Principles Approach

Awareness

• Does the business demonstrate a good awareness of ESG?
• Is this reflected in its processes and management structure?

Environmental

• Does the company follow good practice for limiting or mitigating its environmental impact, in the context of its industry?
• How does it encourage the responsible use of the world's resources?

Social

• What impact does the company have on its employees, customers and society as a whole?
• Is it taking steps to improve the lives of others, either directly, such as through job creation, or indirectly?

Governance

• Do the management structures represent best practice?
• Are the correct policies and structures in place to ensure it meets its legislative and regulatory requirements?

Third Party Interactions

• Is the principle of corporate responsibility evidenced in the company's supply chain and customers?
• How does it promote ESG values and share best practice?

Data Capture Process

• Questionnaire: Foresight assess performance using a standardised in- house questionnaire via our sustainability data platform
• Data Points: Overall, there are 100+ tracked KPIs (quantitative and qualitative) in the questionnaire
• Frequency: Carried out pre-investment and annually thereafter
• Output: The KPIs are used to generate a summary evaluation matrix, as below, alongside a summary appraisal of an investee's ESG position to identify areas of success and areas for improvement

Example: Summary Evaluation Matrix