Well to Sea Investment Co., Ltd. (hereinafter referred to as the “Company”) prioritizes the ESG values of environment, society, and governance in company management and fund management. Company recognizes that reflecting and implementing ESG factors in all processes of company management and fund management is essential for the benefit and sustainable growth of society as a whole, including the company, investors, shareholders, portfolio companies, partner companies, and local communities. Based on the belief that ESG performance, along with financial performance, is the two pillars of sustainable growth, we faithfully practice ESG values to ultimately create greater economic and social values.
2. Purpose
These Principles aim to provide a key framework for integrating ESG considerations into all investment decisions, from deal sourcing to exit, and into the management of companies and portfolio companies. The primary purpose of these Principles is to emphasize the importance of managing and utilizing ESG as a key factor not only for risk management, but also for investment opportunities and the growth of portfolio companies, and all members of Company are required to implement and adhere to these Principles.
3. Principles and Considerations
In October 2020, Company joined the UN Principles for Responsible Investment (UN PRI), an ESG-related global initiative, and has an ESG investment policy in consideration of the UN PRI's six principles. In addition, the company defines ESG factors to fulfill its social responsibility and achieve high performance, integrates and operates ESG factors throughout Company's operation and investment processes, and consistently implements ESG policies to meet the needs of various stakeholders, including investors. Establish a process that integrates, operates and manages. In addition, Company must operate in consideration of ESG factors throughout the investment process, operate an organization dedicated to ESG, and manage it through the ‘ESG Committee & Risk Management Committee’ at all times. Company respects the diversity of all executives and employees, including gender and race, encourages individual growth and promotes a sense of belonging and pride. In addition, we strive to achieve sustainable growth together with various stakeholders along with financial growth by establishing a preemptive ESG management system to quickly respond to the trend of the times.
4. Management Process
Company is required to adhere to ESG policies throughout investment review and execution.
[Pre-Investment Stage]
Prior to investment, a negative screening procedure is used to check whether or not the investment is prohibited. For example, investments in companies belonging to immoral industries, such as gambling, pornography, marijuana, illegal drug manufacturers, and companies involved in child abuse, are absolutely prohibited, and investments in arms and munitions manufacturing industries, UN sanctioned countries, etc. are prohibited. In addition, through a positive screening process, we aim to invest in companies that are competitive in terms of ESG, and refer to the evaluation indicators of various ESG professional organizations to develop our own ESG checklist and external advisory organizations. Through ESG due diligence, the ESG status of portfolio companies to be invested is identified and improvement plans are established in advance. For example, we review environment-related goals and strategies, organizational composition, response strategies related to greenhouse gases and climate change, etc., review ethical management and compliance systems, employee welfare, win-win growth with suppliers, and communication policies with local communities. , Review the operation of the board of directors, activities to protect shareholder rights, and the current status of the establishment and operation of audit organizations.
[Post-Investment Stage]
After investment, ESG performance evaluation standards are set through close collaboration with the management of portfolio companies, and ESG goals and action plans are developed to create sustainable value through ESG-related risk mitigation and opportunity utilization. Guidelines are provided to monitor and improve the ESG level of portfolio companies through an internal management checklist that manages major issues in each E/S/G area. In this process, portfolio companies are encouraged to reflect ESG factors in management, create opportunities to practice sustainability management, reflect ESG factors in KPIs for performance evaluation of portfolio company management, and evaluate ESG performance and performance. Progress on ESG action plans is regularly monitored to report ESG improvements to investors. For major agendas of portfolio companies, prior to the exercise of voting rights, approval from the Investment Deliberation Committee is obtained before proceeding. Recognizing the importance of maximizing the profits of LPs and fulfilling fiduciary responsibilities in the entire process of PEF operation, ensure that the exercise of voting rights and fiduciary responsibilities conform to the principles of the stewardship code. Actively collect opinions by reporting details of voting rights to LP through members' general meetings, regular management reports, and occasional written reports according to issues within the scope permitted by the Capital Markets Act.
[Exit Stage]
After investment closes, potential investors are provided with information on key ESG management areas and value creation opportunities for Company and portfolio companies.
5. Organization and Role
Company conducts management in consideration of ESG throughout the company, and in particular, organizes and operates the ESG Committee, an organization dedicated to ESG for the implementation of responsible investment considering ESG. The ESG Committee oversees the management and supervision of Company's responsible investment management, establishes the ESG policy and framework, and determines the implementation plan, and decides on ESG matters related to investment decision-making of the fund managed by Company. The ESG Committee annually reviews and updates the responsible investment principles in accordance with the rapidly changing ESG trends, provides regular training to support company members to practice their responsible investment goals, and utilizes additional experts and external resources when necessary. In addition, it manages and supports portfolio companies to introduce and implement ESG policies that meet or exceed the company's ESG policies. The ESG Committee plays a role in continuously promoting ESG activities in the pre-investment stage and management of company, oversees the ESG management system, checks compliance with ESG policies throughout investment review and execution, and conducts ESG activities based on the ESG checklist during investment review. In addition, the ESG Committee posts ESG policies and ESG activities on its website to encourage Company's ESG activities, actively communicates with investors and other stakeholders, joins major ESG global initiatives, and promotes ESG issues through the media.
6. Information Provision and Transparency
Company prioritizes transparency of information when communicating with investors and key stakeholders in relation to ESG, and actively discusses ESG issues with investors and other stakeholders through various channels, such as face-to-face, official website, phone, or e-mail. In addition, Company provides sufficient information to investors about achievements and results related to responsible investment through at least annual reporting, and promptly reports important issues when they arise.
