ESG Core Principles

ESG Core Principles

Responsible lending is a key priority for Vector as it seeks to generate competitive returns for its investors. The Company believes that a responsible approach towards its borrowers, the environment and society is an essential part of its success and seeks to embed consideration of ESG factors throughout all stages of its lending activities. Vector is fundamentally committed to building long-term, sustainable relations with its customers and those that introduce opportunities to it. Vector believes that responsible lending requires proper analysis, judgement and mitigation of risk and aims to lend to companies that take a responsible approach towards the environment, society and corporate governance.

ESG Definitions

The three main areas of focus for responsible lending relate to the environmental and social impact of any business’s activity, and the manner in which a business is managed. Together, these Environmental, Social and Corporate Governance processes and procedures focus on non-financial performance indicators that address a company’s approach towards responsible lending, sustainability, its impact on society and the environment, in addition to other ethical and corporate governance considerations.

Environmental

The depletion of natural resources and the clear adverse implications of climate change have raised hugely important concerns about the environment and sustainability. Sustainable options are increasingly being considered as part of any business and, while the issues are diverse, the main areas are:

  • Factors contributing to climate change
  • Efficient energy consumption
  • Responsible disposal of hazardous waste
  • Sustainability of resources

Social

Inclusion, diversity and equality have rightly become increasingly important considerations in relation to the way in which businesses operate and are attracting increasing scrutiny from a range of stakeholders. In particular, businesses must have inclusive and diverse work ethics and practices; and must look at their impact on their employees, local communities and society. The main areas of consideration are:

  • Preservation of human rights, and avoidance in complicity in human rights abuses
  • Equality and diversity amongst employees
  • Non-discriminatory employment practices
  • Ensuring there is no exploitation of child labour or indentured servitude
  • Health and safety
  • Animal welfare
  • Corporate donations

Corporate Governance

Corporate governance covers the rights and responsibilities of the company’s management – its structures, corporate values and accountability processes. This relates to the following areas:

  • Management structure – power of the CEO within the Board, separation of Chairman from CEO, appropriate checks and balances for members of the management team
  • Employee relations and workplace grievances
  • Executive remuneration
  • Corporate Codes of Conduct

Vector’s core ESG Principles

Vector’s core ESG Principles set out below are regularly reviewed. We seek to:

  • Comply with both the letter and the spirit of the law, wherever it applies
  • Ensure we take a responsible approach to lending that reflects the purpose of the borrowing by the borrower
  • Ensure that we always respect human rights and ensure no exploitation of child or minority labour
  • Ensure there is no bribery or corruption in any of our dealings
  • Act with integrity at all times
  • Always be non-discriminatory (whether on grounds of gender, race or disability), and adopt equality and diversity in our employment practices
  • Act responsibly with respect to the environment, aiming for a sustainable approach to the use of resources and avoiding unnecessary waste
  • Ensure that our management structures and policies reflect the need for transparency, accountability, equality and probity in the management of our businesses
  • Comply with and inform industry standard ESG guidelines and best practices, and actively manage ESG considerations and risks effectively.
  • To have as low an impact on the environment as possible

In addition to our Core Principles, Vector has developed specific principles of secured lending which are to:

  • Incorporate ESG issues into our lending analysis and decision-making processes
  • Incorporate ESG issues into our operational policies and practices
  • Ensure appropriate disclosure on ESG issues in Group entities
  • Promote implementation of ESG Principles within the lending industry
  • Report on our activities and progress towards implementing the principles which are consistent with the Principles of Responsible Investment, as set out, by the PRI. We have incorporated these Principles.

Vector’s ESG Procedures

The Company is developing its ESG procedures and these will be expanded. However, at present these fall within three main headings:

Pre-Loan Due Diligence

Prior to any loan advance detailed legal and financial due diligence checks are undertaken on the borrower and the asset being secured. During this process we consider whether there is a risk that the borrower will not be able to service and repay the debt, and we also assess the purpose for which loan is being applied. Vector would not in principle knowingly finance property being used for Adult Entertainment, the sale of weapons & armaments, the processing and sale of Fossil Fuels, Gambling and the sale of Tobacco.

Furthermore, ‎as regards to the Group’s overall loan book utilised to finance residential developments, the board seeks to ensure where possible that projects involving an element of affordable a housing are fairly reflected.

Operational efficiencies

The Group’s integrated operational, management and financial systems and its day-to-day processes create a minimum of paper and related waste, premises are energy efficient and business travel is minimised due to the increasing use of on-line working. As such the company is committed to be coming carbon neutral in the short term. The company has signed up to the Net Zero by 2050 initiative and is actively working towards obtaining the Carbon Neutral Standard.

Governance Committees

The Company complies with the guideline and principles set out by the Quoted Company Alliance in its corporate governance code, to the extend relevant to the company’s size and structure. As such we operate with Audit, Remuneration and Nomination Committees which comprise non-executive directors, meet on a regular basis and report their findings to the main board.

 

Vector Capital Plc is a public limited company specialising in providing principal finance to the private and corporate sector.

Location

Vector Capital Plc 13 Sovereign Park, Coronation Rd, London, NW10 7QP t. 020 8191 7615 e. mail@vectorcapital.co.uk

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