We define Responsible Investment as the integration of ESG considerations into the investment management process and ownership practices with a view to reducing investment risk, positively impacting financial performance and better aligning Annapolis with the broader objectives of society and, in early 2018, Annapolis formally adopted a formal Responsible Investment Policy. Annapolis integrates ESG considerations into all of our investments – existing and prospective. We believe that the consideration, evaluation and management of ESG risks allow Annapolis to make better investment decisions and reduce portfolio risk through time while contributing to the broader objectives of society.
In 2018, Annapolis also appointed a Designated Responsible Person responsible for developing and implementing Annapolis’ Responsible Investment frameworks and diligence checklists and for ensuring policy compliance. Over 2018 and 2019, all six front office team members and Annapolis’ Chief Financial Officer completed the requirements and exams for the Responsible Investment Fundamentals course from the Principles for Responsible Investment (“PRI”) Academy. In 2019, the Designated Responsible Person also completed the higher level PRI Academy course requirements and exam for the Responsible Investment Essentials course.
RESPONSIBLE INVESTMENT GUIDELINES
- We consider ESG factors when conducting due diligence on investment opportunities and when monitoring portfolio investments.
- We seek governance rights with our portfolio companies and are active owners of these businesses where possible.
- We seek disclosure from our portfolio companies on their policies dealing with health, safety and the environment and social issues in the communities in which they operate. We require that our portfolio companies comply with all laws and regulations in the jurisdictions in which they operate and encourage them to follow industry best practices.
- As active owners, we require our portfolio companies to have formal and capable Health, Safety and Environment (“HSE”) Committees in place. Where appropriate, we seek representation on the committees of the boards of directors responsible for HSE and ESG related matters.
Annapolis has historically collected HSE information from our portfolio companies and, in 2020, we began an annual initiative of collecting a broader suite of ESG information to benchmark and, over time, assist our portfolio companies in achieving their ESG goals. ESG related data being collected includes, among other things, the following:
- Confirmation of the existence of key elements of an effective HSE Framework
- 2020 HSE incident statistics
- Results of all inspection reports from the energy regulators in the provinces where each portfolio company operates
- Current Liability Management Ratio or equivalent, which is a measure, expressed as a ratio, of an oil & gas producer’s deemed assets relative to its deemed abandonment and reclamation liabilities, and any expected changes thereto
- Asset Retirement Obligations (“ARO”) at year end and anticipated 2021 remediation and restoration expenditures
- Government grants received related to well, pipeline and oil and gas site abandonment and reclamation
- ARO management plans on an up to five‐year basis
- Water use and current and planned water conservation practices
- Total volumes of natural gas used as fuel, vented and flared in operations
- Greenhouse gas (“GHG”) emissions on a CO2 equivalent basis and GHG emissions management plans
- Carbon taxes paid and impact on fundamental economics
- Sulphur content of crude oil production and the amount of hydrogen sulphide (H2S) produced
- Community and charitable spending
In October 2019, Annapolis announced the publication of our inaugural ESG Report. In the report, we describe Annapolis’ ESG journey to date, including the formal adoption of our Responsible Investment Policy, our approach to Responsible Investing, our 2018/2019 ESG achievements and 2020/2021 ESG goals, ESG case studies and ESG inside Annapolis. Our inaugural ESG Report can be accessed through the link below.