Responsible Investment Policy

Purpose

Volpi Capital is a specialist lower mid-market private equity investor backing software and tech-enabled services businesses across Northern and Western Europe. We invest in companies within core business software, cloud and application services, and smart mobility solutions. We are thesis-driven, collaborative and seek to drive transformative growth through international expansion and consolidation.

We seek to be responsible owners. We believe that understanding the operational aspects of a business, in addition to its financial profile, allows us to manage risk effectively and generate value. We take an active role in our companies, going beyond board participation and working in partnership with management to grow and develop the business and solve problems together.

Environmental, Social and Governance (ESG) considerations impact the way in which we manage the firm, our investment decisions, and our management of portfolio companies. As fiduciaries we recognise that by following a broad set of policy commitments relating to ESG factors, we will better align ourselves and our investors with the broader objectives of society.

Our approach to ESG

With increasing investor expectations for responsible investing and a growing recognition of the long-term value creation potential of sustainable business practices, we have developed a new sustainability strategy to support us respond to evolving market demands and our heightened focus on the contributions we make to our people, the planet, and our portfolio companies.

Developed in 2023, ‘Supporting the Next Generation of Founders’ highlights our commitment to seeking disruptive minds and dynamic businesses that pursue sustainable transformation.

Our new sustainability strategy is focused on three core pillars:

Our Responsible Investment Policy

The purpose of this policy is to outline our commitment towards incorporating ESG considerations throughout the investment process. This recognises the importance of not only managing risk, but also identifying opportunities to deliver value through taking a proactive approach to ESG management. Our values provide the foundations to this approach and are integral to who we are and how we manage our portfolio companies:

We are trusted partners - We build genuine, deep relationships with management teams and investors. We support our partners and provide direction with maturity and calmness. We value integrity, fairness and transparency.

• We have entrepreneurial curiosity - We have an intellectual hunger to learn and innovate. We seek creative and flexible win-win solutions. We constantly seek the new and evolving.
• We drive for returns – We strive for consistent results with a balanced risk-return. We hold one another accountable in driving returns.
• We are a humble and witty team – We collaborate with each other and foster partnerships. We value diversity and treat everyone with equal respect and fairness. We insist on a low ego, personal style.

We strongly believe that, through effective management of our values through our investments, we can deliver long term sustainable value growth for our investor base. Our overall themes which we seek to evaluate across our portfolio include, but are not limited to: environmental management, health & safety, people management, suppliers & communities, and governance. Volpi Capital seeks an engaged approach and is committed to evaluating these areas within its portfolio, while also seeking improvement where possible and necessary.

Objectives & Commitments

This policy is in line with both local and international standards, including the United Nations Principles for Responsible Investment (UN PRI.) As a signatory to the UN PRI since 2021, Volpi Capital is committed to integrating its principles into its investment lifecycle, from deal screening to due diligence, and post investment monitoring until the exit period.

As a UN PRI signatory, Volpi Capital has committed to following these expected principles:

Incorporate ESG issues into our investment analysis and decision-making processes.

1. Be active owners and incorporate ESG issues into our ownership policies and practices.
2. Seek appropriate disclosure on ESG issues by our portfolio companies.
3. Promote acceptance and implementation of the principles within the investment industry.
4. Work together to enhance our effectiveness in implementing the principles.

Report on our activities and progress towards implementing the principles.

Volpi Capital has aligned itself with the ILPA ESG Data Convergence Project since 2022, which includes tracking of six primary metrics across its portfolio, in order to increase availability and comparability of key environmental, social and governance related metrics. Additionally, Volpi is investigating whether to adopt the recommendations of the ‘Task Force on Climate-Related Disclosures (TCFD)’ to further incorporate climate-related disclosure.

Scope

This Policy applies to all Volpi Capital employees, across all our funds and covers all existing investments.

Guiding principles for investment & exclusions

Responsible investment is a key part of Volpi Capital’s strategy, and thus the business excludes companies within its fund which are directly engaged in the following activities:

• The exploitation of human rights, with child or forced labour directly or indirectly within the supply chain, or through other human rights abuses.

• The manufacture, marketing, and distribution of weapons, artillery, and/or ammunition
• The manufacture, marketing, and distribution of tobacco distilled alcoholic beverages, pornography, and related products.
• The creation and promotion of gambling such as in casinos, online gaming, or equivalent enterprises
• The production of products which are illegal under local, UK, or international law.
• The exploration, extraction, and production of coal or crude oil, as well as any other activity which may cause serious environmental damage.
• The development or research of technical applications, such as electronic data programs or solutions, which support activities within our exclusion list.

Volpi Capital will withhold investment in companies which conduct business with a person, entity, or country that is the target of UN trade sanctions, in violation of fundamental human rights, or taking part in any illegal activities under local or international law.

Integrating responsible investment principles across the investment lifecycle

We incorporate ESG factors across the investment lifecycle, alongside more traditional financial and business performance considerations. We not only view these activities as a way of managing business risk, but also to deliver opportunities to increase shareholder return and create long-term sustainable value. The process we follow to integrate ESG considerations in our investment activity is highlighted in the diagram below. This process complements the sustainability risk policy that is developed in line with the SFDR (https://www.volpicapital.com/volpi-capital-sustainability-risk-policy).

Responsible Investment Lifecycle

Initial screening and due diligence

Volpi Capital conducts a due diligence screening as per our guiding principles & exclusions list, as referenced above.

We also conduct a comprehensive ESG analysis during the pre-investment phase as part of the due diligence process to understand the gaps and opportunities of each investment. This process complements our sustainability risk policy that is developed in line with SFDR. Where necessary we establish improvement areas and decide on mitigation strategies.

As a minimum requirement we expect companies to comply with all applicable laws and regulations in the countries in which they operate. Our framework covers a broad range of impact areas, including but not limited to:

Environmental – Although our investment strategy targets are asset-light businesses, we still encourage them to identify and implement measures to reduce their environmental impacts. Key indicators include: environmental management, energy management, waste management and water management.

• Social – We expect all our portfolio companies to be equal opportunities employers, and we do not tolerate unfair, discriminatory, illegal, or immoral work practices either in portfolio companies or across the supply chain. We support our companies with people management. This includes helping to attract and retain talent in a competitive labour market through initiatives such as providing learning and development opportunities. We also ensure that companies provide a safe working environment which promotes positive staff wellbeing. Key social indicators are categorized along the following areas: Health & Safety with policies, procedures and training; People with recruitment, retention, learning & development, diversity and inclusion and human rights; Community and charity with community engagement.

Governance – We ensure our portfolio companies have a board that delivers strong leadership, and which is effective, well-balanced, and accountable. This includes operating in an ethical manner at all times, as well as engaging with shareholders and awarding sufficient levels of remuneration. We expect companies to safeguard against acts of bribery and corruption, updating and communicating relevant policies to employees, and introducing targeted training to embed these policies when necessary. Key governance indicators include the following: general governance, anti-money laundering, anti-bribery and corruption, whistleblowing, cybersecurity, and conflicts of interest and market abuse.

Investment period

Through our active ownership strategy, we work with the management of each portfolio company to improve overall sustainability performance across the investment lifecycle, as well as its financial success. We do this by providing ongoing support and guidance as well as providing access to external advisors and educational sessions where needed.

Monitoring ESG across our portfolio companies is an ongoing process. We begin with an initial ESG onboarding, to set priorities based on the risks and opportunities flagged during our due diligence. All investee companies receive an external ESG assessment post-investment, and any recommendations form the basis of a 100-day plan, which will be tracked by Volpi Capital, as well as followed up on for each yearly assessment. Any key material risks and opportunities that are subsequently flagged up are included in an implementation plan. Post investment we strengthen the board by appointing an independent and experienced non-executive Chairperson, an improved finance function and the addition of experienced non-executive support from Volpi Capital. ESG management is discussed regularly at portfolio review meetings and any material ESG concerns are reported to investors in quarterly valuation reports.

Exit

On exit, we look to ensure that ESG improvements made during Volpi Capital’s ownership continue. We actively integrate stewardship principles by ensuring continuity on the board and leadership of ESG aspects following exit, while also incorporating prioritised ESG aspects into the vendor due diligence process.

ESG at Volpi Capital

At Volpi Capital, ESG considerations are a key value driver which are incorporated throughout all areas of the business. They impact how we manage the firm, our investment decisions and how we manage portfolio companies. We uphold ourselves to the same high standards which we request for our investee companies. Our latest Annual ESG report provides further detail on our activities.

Implementation of the policy

Governance structure

Governance of ESG factors is a collaborative effort led by partners and overseen by the CFO. Through regular reviews and discussions, they ensure that ESG considerations are integrated into investment decisions and actively monitored throughout the investment lifecycle. Furthermore, engagement within the firm is fostered through ongoing education and training programs to enhance awareness and understanding of ESG issues among team members.

Regular communication and feedback loops facilitate continuous improvement in ESG practices, reinforcing our commitment to responsible investing across all levels of the organization. This Responsible Investment Policy is communicated to all investee company boards, and we regularly discuss ESG management at our portfolio review meetings. We report any relevant material ESG concerns to investors in our quarterly valuation reports on a case-by-case basis, as appropriate.

This document is an update to our June 2022 policy; reflecting how we have enhanced our approach to responsible investment. This revised policy has been discussed with and circulated to all Volpi staff. Volpi Capital partners will be responsible for the implementation of this policy and will complete a periodic review to ensure its continued relevance.

Stewardship

We accept and adopt the definition of stewardship, as meant by PRI, within our business. As such, we use our influence as investor to maximise overall long-term value, including the value of common economic, social, and environmental assets. To do so, we engage with our portfolio companies at all stages of the investment cycle and during our role on investee boards and board committees.

Being a majority shareholder, Volpi Capital has the strong capability to influence and guide senior leadership towards achieving its ESG goals. Where possible, Volpi Capital provides recommendations directly to the board and constantly follows-up on these recommendations to ensure that stated objectives are reached as expected. We commit to communicating this policy to all investee company boards and regularly discuss ESG management at our portfolio review meetings.

Political engagement

Volpi also does not conduct any form of political engagement directly or through any third parties.

Information about the Sustainable Finance Disclosure Regulation (SFDR)

This Responsible Investment Policy is in accordance with regulatory requirements and applicable legislation such as the Sustainable Finance Disclosure Regulation (SFDR), which forms part of the EU’s Sustainable Finance Action Plan.

More information about Volpi Capital’s obligations under the Sustainable Finance Disclosure Regulation is available on the website at https://www.volpicapital.com/sustainability-related-disclosure.

Sustainability Risk Policy

Information about Volpi Capital’s consideration of sustainability risks is available on the website at https://www.volpicapital.com/volpi-capital-sustainability-risk-policy.

Principal Adverse Impact Statement

Information about Volpi Capital’s consideration of principal adverse impacts is available on the website at https://www.volpicapital.com/principal-adverse-impact-statement

This Policy has been approved by Volpi Capital’s partners and will be reviewed annually.

Crevan O’Grady & Marco Sodi

Managing Partners

September 2024