Oceanwood Capital Management LLP (the “Firm” or “Oceanwood”) is authorised and regulated by the FCA as a full-scope AIFM. Furthermore, it is registered with the Securities Exchange Commission (“SEC”) as an investment adviser under the U.S. Investment Advisers Act 1940

Oceanwood acts as the alternative investment fund manager (“AIFM”) to a number of alternative investment funds (“AIFs”). It also acts as the delegated investment manager of third-party collective investment schemes registered to act as undertaking for collective investment in transferrable securities (“UCITS”, together with the AIFs, the “Funds”). Some of the Funds are categorised as Article 6 under Regulation (EU) 2019/2088 (“SFDR”) (“Art. 6 Funds”), whilst others are categorised as Article 8 under SFDR (“Art. 8 Funds”).

Some of the Funds are either at the end of their investment period, or the investment mandate of the Fund does not refer to integration of risks and sustainability factors. Therefore, these funds are out of scope of this policy.

ESG Policy Scope

This policy outlines Oceanwood’s commitment and approach to integrating Environmental, Social and Governance (“ESG”) factors within the ethos and culture of the Firm, and within Oceanwood’s investment process.

ESG has always been at the core of Oceanwood’s investment philosophy, and the investment team has a deep-rooted history of engagement and activism with portfolio companies on ESG issues, with an objective of improving the financial health of the company. Oceanwood’s event driven strategy is well suited for ESG integration, and over time its investment process has shifted towards reflecting the increasing importance of ESG factors on modern life and the economy. Oceanwood has built out structured frameworks around ESG integration to help identify, measure, analyse, monitor and document ESG risk factors within the investment process and their impact on financial models.

Oceanwood believes that ESG is not only core to our investment process but also our own business culture and processes, and we constantly seek to ensure we are maintaining the highest standards in this space, in the interests of our stakeholders as well as the broader communities we impact.

ESG Committee

Oceanwood considers senior oversight and accountability for ESG initiatives crucial for setting a progressive ESG culture across the Firm. To this end, Oceanwood has established an ESG Committee consisting of senior individuals representing a range of business areas, both investment and noninvestment.

The ESG committee is responsible for Oceanwood’s ESG strategy across all business activities, at a firm and fund level. The ESG Committee meets at least quarterly and has oversight of ESG integration within the investment process and development of the ESG investment framework. The quarterly meetings include, but are not limited to a review of ESG Reports, oversight of ESG engagement with portfolio companies and oversight of proxy voting.

ESG Integration

Investment Process

The ultimate objective of including ESG factors in investment analysis and decisions is to better manage risks and improve returns. This is in line with each of the Funds’ overall investment objectives and aligns with Oceanwood’s fiduciary duty to maximise value for its investors.

In addition, as it relates to Funds classified as Article 8 under the EU’s Sustainable Finance Disclosure Regulation, our objective is to achieve strong financial returns, whilst mitigating ESG risks. Our goal is to research “bad actors” with problematic ESG issues, which in our view are not being appropriately addressed. We seek to construct a portfolio with a reduced overall ESG risk profile and exposure to some of the most highly regarded companies in Europe.

Oceanwood believes that being active owners and responsible investors results in companies with better ESG profiles and characteristics in the long-run, ultimately maximising value for Oceanwood’s investors.

Oceanwood’s investment philosophy has incorporated Environmental, Social and/or Governance factors from the outset, evaluating the financial impact of ESG risks. Over time, the team has worked to formalise the consideration of ESG Risk factors within the investment decision making process.

Oceanwood has developed multiple tools and strategies for integrating ESG factors into the investment process. The tools deployed vary by fund based on the suitability of ESG considerations to the investment strategy and certain regulatory obligations (such as SFDR). The table below sets out the ESG strategies deployed in each Fund. Details of how each tool is deployed are set out below.

ESG Integration Tool Co-investment vehicles Art. 6 Funds Art. 8 Funds
Negative ESG Screening Exclusion List ✓ (binding)
Quantitative ESG Assessment
Qualitative ESG Assessment
Stewardship – Engagement and Proxy Voting

Negative ESG Screening Exclusion List

For all investment vehicles, Oceanwood observes all legal requirements, such as those required by domestic/international law, bans, treaties or embargoes. The approach to additional exclusions differs by fund vehicle in accordance with each fund’s offering documents. Whilst Oceanwood does not systematically apply an exclusion list at a manager level we do for the Art. 8 Funds. In addition, if the investment team and/or ESG Committee identify a company that is deemed to have insurmountable ESG risks in any fund, either the investment team or the ESG Committee may choose to exclude the name from the portfolio on a case-by-case basis.

Quantitative ESG Assessment

Oceanwood has engaged Sustainalytics to provide unbiased ESG research and ratings. Sustainalytics provides Oceanwood with ESG Risk Ratings, Controversies Research and RTS Primary and Additional Indicator data which is used in the quantitative ESG assessment for all investment opportunities (long and short), covered by Sustainalytics. All quantitative ESG data is automatically fed into an ESG report for each company and reviewed by the investment team in line with the guidance below.

For corporate entities which are covered by Sustainalytics, their ratings and research are automatically incorporated into the company’s ESG report, maintained by the investment team. The investment team checks the Sustainalytics score. Companies rated as High or Severe by Sustainalytics require additional due diligence by the investment team. This due diligence will typically involve taking a deeper dive into the research report provided by the third-party data providers, as well as any other publicly available information, to understand the drivers behind the ESG risks and assess whether the risks are likely to have a material financial impact on the investment opportunity, and complete the mitigation section of the ESG report, for review by the ESG Committee.

For entities that are covered by Sustainalytics Controversies Research, their controversies ratings are also automatically incorporated into the company’s ESG report. If any companies have received a High or Severe Controversy rating, the investment team is required to review the event to determine whether the risks are likely to have a material financial impact on the investment opportunity, and complete the mitigation section of the ESG report, for review by the ESG Committee.

In addition, on an ongoing basis the investment team reviews controversy alerts and incorporates any newly identified material ESG issues into their investment thesis where relevant.

Sustainalytics provides Oceanwood with quantitative data on the 14 primary indicators as defined by the Regulatory Technical Standards (RTS Primary Indicators) under SFDR, as well as a selection of RTS Additional Indicators. This data is required by SFDR to compile annual reporting. Oceanwood incorporates this data into the assessment and monitoring of our investments and potential investments. Both RTS data and ESG ratings can be ranked against sector peers and the broader European index to provide context for further assessment.

In addition to the data provided by Sustainalytics, where available, third-party ESG scores generated by other ESG ratings providers are automatically fed into the ESG Report and reviewed by the investment team.

Qualitative ESG Research

Additional qualitative ESG research is conducted by the investment team in the following scenarios:

The investment team completes an ESG Checklist for each company not covered by Sustainalytics which details observations identified covering a broad range of ESG issues.

In the case of Art. 8 Funds, in circumstances where the sustainability risks are overwhelmingly detrimental to the potential performance of an investment, the ESG Committee may instruct the investment team to cease to pursue the opportunity further.



In scenarios where the investment team has identified a potential ESG risk in an investment held by an Article 8 Fund, the investment team will first consider the impact of the ESG risk on the investment thesis. If the investment is still compelling consideration will then turn to how the ESG risk scores against the appropriate ESG factors. This includes the materiality of the risk and the likelihood of it occurring. Even if the ESG risk is high we may still invest if, for example, we believe the company has already laid out significant proposals to mitigate or remedy these risks, or we believe that engagement by us may encourage the company to take actions to mitigate the risk. The Mitigation Process assesses whether specific aspects of a company will likely not pose material ESG related risks in the future, due to current/announced plans to fundamentally transform the ESG profile of the company or whether active engagement from Oceanwood can compel the company to transform its ESG profile.

Engagement Policy

Oceanwood sees engagement as an integral part of its investment process and has a long history of engagement and active ownership with a focus on reducing ESG risks. Oceanwood’s investment strategy is well positioned for engagement opportunities, and Oceanwood engages with the management teams of portfolio companies where relevant and appropriate. The primary objective of engagement on ESG issues is to help companies improve their long-term financial outlook.

Oceanwood monitors the response and any action taken because of their engagement and the ESG Committee reviews all engagement activity each quarter. If a company fails to respond to engagement or does not take action as a result of the engagement, Oceanwood may exit the position if the engagement was key to the investment thesis.

Proxy Voting

In addition to the direct engagement activities noted above, Oceanwood also demonstrates active ownership through proxy voting. Oceanwood has a separate Proxy Voting Policy, which has been summarised below.

Voting decisions are made by Oceanwood in accordance with our fiduciary duty to our clients and in line with relevant regulatory requirements, including the US Department of Labor guidance for ERISA Plan fiduciaries charged with the voting of proxies.

If a position is held on swap and Oceanwood would not be able to cast a vote, for certain positions where voting on a decision is integral to the investment thesis, the position may be converted into cash in order to vote in a company meeting. If securities are lent out (e.g. via repo), they may be recalled in order to cast a vote on pertinent matters.

Approach to Sustainability Outcomes

The investment decision processes of applicable Funds integrate sustainability risks as one set of parameters, among others, in the investment decision-making process. “Sustainability risks” mean ESG events or conditions that, were they to occur, could have a material negative impact on the value of the investments of the funds, and hence, the Net Asset Value of the funds. The significance of sustainability risks to the investment proposition is assessed in the context of the relevant underlying asset, including its overall risk and return profile. Other relevant considerations include the level of intended or actual control or influence exercised by Oceanwood.

The identification of one or more sustainability risk alone will not generally preclude Oceanwood from pursuing an investment where such investment is otherwise assessed to meet the investment criteria, including where such sustainability risk can be appropriately monitored and managed.

In the case of Article 8 Funds, in circumstances where the sustainability risk(s) are overwhelmingly detrimental to society, the environment and stakeholders, the ESG Committee may instruct the investment team to cease to pursue the opportunity further. Given the broad range of sectors, industries and asset classes within Oceanwood’s investment universe, there are no consistent sustainability indicators that are used across all investment opportunities to measure the attainment of the environmental and social characteristics noted above.

In addition, none of the Funds commit to any minimum proportion of assets to be invested in assets that contribute to an environmental objective, or in sustainable investments, or limit its ability to invest in assets that do not contribute to an ESG objective or are not sustainable investments.

UN-Supported Principles for Responsible Investment (PRI)

Oceanwood became signatories of the UN-supported Principles for Responsible Investment (PRI) in January 2021. The PRI is fast becoming a global standard for investment managers ESG alignment.

Through its association with the PRI, Oceanwood is committed to adhering to the six Principles for Responsible Investment:

Oceanwood will report annually to the PRI on the Firm’s responsible investment initiatives, activities and achievements and seeks to meet the standards expected by the PRI in doing so. Oceanwood will be pleased to share this reporting with investors and other stakeholders when available.

Carbon Disclosure Project (CDP)

Oceanwood became an Investor Signatory of the Carbon Disclosure Project (“CDP”) in December 2020. The CDP is a non-for-profit charity, seeking to promote industrial-scale environmental disclosure and engagement, aligned with the TCFD (Task Force on Climate-related Financial Disclosures). The CDP runs a global disclosure system for investors to manage environmental impacts. As an investor signatory, Oceanwood is able to nominate companies to report on environmental factors (climate, forests and water). Oceanwood can also access a database of environmental information to inform decision making, engage with companies, reduce ESG risks and identify opportunities.

Say on Climate

Say On Climate believes that all listed companies have an influence on climate change and all need to take action to address their emissions. The Say On Climate campaign calls on companies to disclose carbon emissions each year, publish a 'credible' climate transition plan and give shareholders an annual advisory vote on the plan. Through Oceanwood’s support for “Say On Climate”, we encourage all listed companies to submit a Climate Transition Action Plan at their AGM for a shareholder vote.

Oceanwood’s commitment to both the CDP and Say On Climate initiatives is aligned to the PRI Principles 1-4 relating to ESG investment analysis, active ownership, corporate disclosure and investor collaboration.

Oceanwood Firm ESG Procedures

In addition to the ESG processes deployed within the investment process, Oceanwood believes it is vitally important to operate its own business in line with the standards it expects from portfolio companies. As such, Oceanwood has implemented a number of business initiatives across environmental, social and governance pillars, which the ESG Committee is responsible for.

Remuneration Policy

The annual review and remuneration process for employees takes into consideration all aspects of employee performance and development throughout the year, this includes assessing employee participation in developing and adhering to Oceanwood’s ESG Policy and responsible investing process.

Policy Maintenance

Policy Breaches

Oversight of compliance with the ESG Policy forms a part of the Oceanwood Compliance Monitoring Programme. The Partners of Oceanwood Capital Management LLP maintain ultimate oversight over Oceanwood’s policies and procedures. In the event of any breaches of the ESG policy, the ESG Committee would be notified, and the breach would be escalated to Oceanwood’s senior management if appropriate.

Policy Review

The ESG Policy is reviewed at least annually.

Commitment to the UK Stewardship Code

Under Rule 2.2.3R of the FCA's Conduct of Business Sourcebook, Oceanwood Capital Management LLP ( “Oceanwood”) is required to disclose the nature of its commitment to the UK Financial Reporting Council's Stewardship Code (the "Code") or, where it does not commit to the Code, its alternative investment strategy. The Code is a voluntary code and sets out a number of principles relating to engagement by investors with UK equity issuers. Investors that commit to the Code can either comply with it in full or choose not to comply with aspects of the Code, in which case they are required to explain their non-compliance.

Oceanwood employs a European-focused event-driven investment strategy which involves, among others, investments in equities, including UK equities. The Code is therefore relevant to only certain aspects of Oceanwood's investment process. While Oceanwood generally supports the objectives that underlie the Code, Oceanwood has chosen not to commit to the Code. Oceanwood invests in a variety of asset classes and in a variety of jurisdictions and its approach in relation to the engagement with issuers and their management will vary on a case by case basis. Therefore, Oceanwood does not consider it appropriate to commit to any particular voluntary code of practice relating to any individual jurisdiction or asset class.

No consideration of sustainability adverse impacts

Oceanwood Capital Management LLP does not currently consider the principal adverse impacts of investment decisions on sustainability factors in accordance with Article 4 of the SFDR, as the detailed rules and guidance regarding such disclosure have not been finalised.


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