TripleWaterfall (the “Firm”) approaches investments by identifying attractive portfolio companies and aligning their business strategies with a focus on long-term value creation. The Firm focuses exclusively on investments within the construction and mining services categories. In pursuing this strategy, TripleWaterfall takes into account environmental, social, and governance (“ESG”) issues, which the Firm believes can enhance the long-term value of investments and is an important element of responsible investing.
As it relates to ESG issues, the TripleWaterfall team brings vast industry experience and ESG considerations when making investments. Considering ESG issues allows for us to identify opportunities to leverage our experience and our strengths in maximizing investment return, while also having a positive impact on our competitive position, brand, and reputation.
TripleWaterfall is focused on investments that benefit society and provide financial returns that can reward both non-governmental organizations (“NGOs”) and limited partners. Every investment has some positive societal impact such as creating jobs, making products cheaper, building schools, or funding education. TripleWaterfall achieves a predefined goal that goes hand-in-hand with investment objectives. The impact is not just a by-product of the investment, but rather an investment is selected because it will generate a positive impact. TripleWaterfall utilizes private investor capital to increase NGO impact, offering positive social outcomes and full transparency along the way.
TripleWaterfall utilizes a strategic, fact-based and diligence-driven investment approach that by definition includes a variety of ESG considerations. Additionally, TripleWaterfall continually monitors the broad consequences of every investment to ensure we are taking all of our investors’ needs into account.
TripleWaterfall has broken down incorporation of ESG into three categories for the Firm: (i) ESG Management of TripleWaterfall’s own operations, (ii) Due Diligence of potential investment targets, and (iii) Responsible portfolio company ownership and ongoing ESG monitoring.
- ESG Management of TripleWaterFall’s Own Operations
TripleWaterfall incorporates the principles of this ESG policy into its own operations by:
- Distributing this ESG policy to TripleWaterfall employees and, as appropriate, consultants, contractors, and advisors.
- Encouraging constructive dialogue on how TripleWaterfall accommodates ESG issues in a way that is consistent with limited partners’ and other investors’ initiatives and interests as well as balancing other considerations with respect to potential and current portfolio investments.
- Instructing TripleWaterfall investment professionals to incorporate ESG issues into due diligence for potential investment opportunities and providing appropriate support and assistance.
- Ensuring that business practices align with a culture of integrity and accountability, including by managing environmental and social risks and implementing procedures with respect to bias management and discrimination and harassment prevention.
- Focusing recruiting efforts both at the Firm and portfolio company level to hire veterans, minorities, and people of disabilities as a true equal-opportunity employer.
- Hiring and favoring women in management positions and leadership roles when skillsets are equal to other applicants.
- Reviewing and amending this ESG policy on an ongoing basis as-needed in respond to ESG developments that may impact TripleWaterfall.
- Due Diligence of Potential Investment Targets
TripleWaterfall’s current mandate is to make controlled equity investments primarily in lower middle market construction and mining services companies with multiple avenues for growth and operational improvements. Before making an investment, TripleWaterfall considers ESG issues as part of an extensive due diligence process that includes analysis of other financial and business indicators of value. While the extent of TripleWaterfall’s review of ESG issues will vary according to each specific target investment, the analysis may generally include:
- Assessing applicable compliance with laws and regulations.
- Reviewing, internally and potentially with the help of third-party consultants when needed:
- Environmental, health, and safety assessments, audits, and reports of key sites or facilities associated with the target portfolio company
- Human resources policies, procedures, and best practices (including practices which relate to diversity and inclusion initiatives)
- Any other ESG factors, risks, or opportunities that may be material in the specific target portfolio company
- Understanding that management structure and determining the effectiveness of corporate governance at the management, board, and/or committee levels.
- Responsible Portfolio Company Ownership and Ongoing Monitoring of ESG
Following the successful completion of every investment, TripleWaterfall works closely with the management of portfolio companies to monitor ESG risks that are identified in the due diligence process or that may arise over the lifecycle of the investment. The Firm will typically seek to hold board positions in the portfolio company to participate directly in the review and management of, among other agenda items, ESG risks and considerations. TripleWaterfall monitors such risks during the post-investment ownership period by:
- Using the portfolio company’s governance structure to establish appropriate oversight in the areas of audit and risk management.
- Maintaining an active and frequent dialogue with management teams to ensure the Firm is aware of significant current events and material ESG risks related to the portfolio.
- Requesting and reviewing monthly and quarterly reporting packets from management with updates on ESG matters when issues arise, including at key construction sites or facilities associated with the portfolio company. Requests may include ESG-related inquiries, initiatives, and review of negative incidents or accidents.
- Reporting to limited partners to the extent we become aware of significant changes to the ESG factors and risks associated with TripleWaterfall’s portfolio companies since the initial due diligence process concluded.
While making private equity investments, TripleWaterfall takes the following specific considerations and objectives into account:
- Continuous Process – Consider environmental, public health, safety, and social issues associated with target portfolio companies when evaluating whether to invest in a particular business as well as during the period of ownership
- Stakeholder Access – Be accessible to relevant stakeholders and limited partners either directly or through representatives of portfolio companies, as appropriate
- Anti-Corruption – Maintain strict policies that prohibit bribery and other improper payments to public officials, consistent with the U.S. Foreign Corrupt Practices Act, similar to laws in other countries, as well as the OECD Anti-Bribery Convention. Implement appropriate diligence and prevention procedures with related to healthcare fraud and abuse laws in all healthcare provider investments.
- Long-Term Sustainability – Seek to grow and improve companies in which we invest through long-term sustainability initiatives, while also considering stakeholders on environmental, social and governance issues. Work through appropriate governance structures with portfolio companies with the goal of improving performance and minimizing adverse impacts of these areas.
- Information Sharing – Provide information to limited partners as requested on the matters addressed herein, and work to foster transparency about our activities.
- Basic Human Rights – Respect the human rights of those affected by our investment activities and seek to confirm that our investments do not flow to companies that utilize child or forced labor or otherwise disrespect the human rights of their stakeholders.
- Promotion of Principles – Encourage our portfolio companies to advance these same principles in a way which is consistent with fiduciary duties.