Black Stars Investments Limited (the “Firm”) is fully committed to incorporating Environmental, Social and Governance (‘ESG’) factors as part of the investment philosophy and process for the funds it advises, and in its operation of the business as a whole. This policy sets out the methods of integrating ESG factors across the business.

This policy is applicable to all of the funds advised by the Firm and is reviewed annually by senior management. The Managing Partner and senior management personally oversee the implementation of the policy.  

Investment

ESG factors are core factors in our fundamental, bottom-up analysis and decision-making.  The impact ESG factors have on the attraction of potential investments, either because of implications for profit pools or likely costs of capital, will clearly be material.  We seek, through our analysis, to identify significant opportunities and mitigate risks, especially where such trends are nascent.  We recognise the importance for all stakeholders to contribute to the minimisation of current and future environmental challenges, promote responsible business practices, encourage diversity, and protect human rights.  We understand that as an investment advisor, we have a vital role to play in encouraging positive change for future generations and to support our planet.

Our investment team is responsible for considering such factors and their impact on shareholder value throughout the investment process. Conclusions across different teams may vary, as assumptions and interpretations can be subjective.  Examples of issues that are considered as part of company and industry analysis include:

• Environmental: consideration of the entire value chain (including end product use), monitoring and disclosure of impact, emissions (greenhouse gases and local emissions), hazardous waste, resource and land use.
• Social: sustainable labour practices (competitive pay, labour and management dispute resolutions), support of wider community and equal opportunities (gender, age, social, origin), and effect on local communities etc.
• Governance: board independence and authority, senior management track record, CEO compensation level and structure, insider trading, corruption, political connections, special voting rights or restrictions, downside management, equity issuance and buy back history.

Research, monitoring and engagement with companies are fundamental parts of our investment process. We seek to build effective relationships and maintain broad levels of engagement with management and other stakeholders of the companies to which we allocate capital. 

We believe in interacting directly with management teams to articulate the case for applicable ESG issues and believe our role as allocators of capital gives us a unique voice which others may not possess. Such discussion may lead to meaningful shifts in corporate behaviour that are economically, environmentally, and socially advantageous to the companies, their stakeholders, countries, and our clients. We believe that active long-term investing is best-placed to achieve such goals, given the depth of dialogues and the linkage between our objective of capital compounding and the general objective of sustainable investing. We continue to keep our sustainably investing policy under review and aim to continuously review as necessary.