LHR’s ESG principles help to inform, shape and support key decisions at all stages of the investment process.
Investment-related decision-making relies on a combined assessment of the materiality, probability and impact of ESG related factors. We believe that assessing and monitoring ESG criteria is a key element of risk and opportunity analysis and should serve to improve value in invested assets and their long-term resilience to key risks.
We recognize that for these principles to be properly integrated, effective governance structures must be implemented at the deal-structuring stage to ensure accountability, appropriate controls and transparency.
Investments are assessed on the merit of investment strategy fit and suitability, financial return, overall risk and ESG metrics. In the first instance, investments must be shown to meet LHR’s target allocation, investment strategy and risk and return hurdles. Having demonstrated this, investments must also be shown to provide broader ESG benefits and not present unmitigated ESG risks or issues that conflict with our investment strategy or Policy
As such, we take significant measures to better assure the delivery of positive financial returns to investors while working to ensure our commitment to ESG is formally embedded across our asset operations, management and governance structures, procedures, investment thesis, decision-making, business culture and responsibilities.
Relevant ESG risks and opportunities are considered at each stage of LHR’s investment and asset management process.
Integrating ESG into our Investment Process
Identify whether an investment opportunity triggers any exclusionary criteria.
Assessment of political and reputational risk.
Consideration of fit with ESG principles and our broader investment strategy.
Active due diligence through site assessments, visits and close communication with management team.
Direct engagement with a company’s management to understand the business and the ESG strategy of its leadership.
Social and environmental impact assessments and consultation with third party experts sought where necessary.
Develop views around ESG philosophies and practices of the management teams and leaders that are driving growth.
Assessment of key areas for value creation and further ESG implementation.
Assess outcomes from Environmental Impact Assessment, community consultation and stakeholder engagement.
Ensure that all stakeholders have appropriate grievance procedures and maintain open lines of communication.
Continuous correspondence with the management responsible for day-to-day management of project and overseeing any ESG-related risks and opportunities.
Monitor ESG performance through quarterly self-audit against ESG KPIs and external/independent annual audits. Dashboard reporting templates designed for each asset.
Continually assess the markets in which we operate to proactively identify risks and develop mitigants.
Continuous reporting and risk assessment obligations across all ESG objectives.
Consider exit optionality and viable rehabilitation options upon closure of the mine.
Assess how ESG improvements can add value to the asset over the asset’s life.
Highlight potential ESG impacts when creating material for potential acquirers.