Teslin's Environmental, Social & Governance policy

Our ambition is to invest in companies that are well-positioned for a sustainable future or, at the very least, have the ambition to become so. We believe this is only achievable when a company conducts business responsibly—taking into account all stakeholders, the environment, and society. In the long run, this also benefits performance. Investing inherently involves identifying and managing risks, which we do through in-depth knowledge of and close involvement with a select number of companies. ESG fits naturally into this process.

ESESG and sustainability risks are an integral part of our investment activities, both before and during the investment period. We define sustainability risks as ESG-related events or conditions that could negatively impact the value of our investments. Our ESG and sustainability risk policy is integrated in three ways:

• Investment universe and exclusions: Our focus on European small- and mid-cap companies results in relatively low exposure to ESG and sustainability risks. Country risks are minimal, and high-risk sectors such as mining and oil production are excluded from our investment universe. We explicitly exclude sectors such as tobacco, weapons, pornography, and gambling. We do not invest in companies that we believe cannot create sustainable value in the long term.
• ESG as part of fundamental analysis: As entrepreneurial shareholders in a concentrated portfolio, we carefully select the companies we invest in. ESG and sustainability risks are essential components of our fundamental analysis to assess a company’s long-term viability. A company’s ability to grow is increasingly determined by its sustainability proposition.
• Active shareholding: Once invested, we actively engage with companies to guide them toward a sustainable future. Our significant ownership positions grant us influence, allowing us to challenge companies on ESG issues, encourage improvements, and monitor progress. If a company fails to meet its objectives, we push for corrective action. Voting rights are a key tool in exerting influence, and if necessary, we reconsider our investment.

We request that the boards of our portfolio companies report annually on their ESG policies and disclose their contributions to societal challenges. We recognize that relevant ESG factors differ per company, so we tailor our approach. To enhance comparability, we focus on key factors that we consider crucial for sustainable value creation.

ESG provides a framework to analyze companies from multiple perspectives, identify opportunities, and establish measurable goals. Where appropriate, we collaborate with other shareholders and stakeholders (such as Eumedion) to share knowledge and increase our influence. Our approach includes:

• Governance: Outlined in our Stewardship Policy on Entrepreneurial Shareholding, defining our active shareholder role since Teslin’s inception.
• Social Factors: Evaluating how companies interact with stakeholders, ensuring fair and safe products/services, providing good working conditions, and upholding data protection and human rights throughout the value chain.
• Environmental Factors: Assessing how companies contribute to public environmental goals, such as those in the Paris Agreement, including energy use, resource efficiency, hazardous waste management, and product sustainability.

At this time, we do not take into account the adverse effects of investment decisions. These adverse effects refer to negative impacts on a number of mandatory and optional indicators of sustainability factors, such as “emissions into water” or the “share of hazardous and radioactive waste,” as defined in European sustainability legislation (Commission Delegated Regulation (EU) 2022/1288). Currently, we do not have sufficient information to meaningfully report on these indicators.

We expect to be able to report meaningfully on the most significant adverse effects of our investment decisions on sustainability factors in the short to medium term. We will do so as soon as we have access to sufficient data. In particular, we anticipate obtaining sufficient data due to the sustainability reporting standards outlined in Directive (EU) 2022/2464 on corporate sustainability reporting (the “CSRD”), which the companies in which our funds invest will report on in the short to medium term.

We adhere to the same standards that we consider relevant for our investee companies. Our internal ESG committee identifies and implements improvements in relevant ESG areas, such as CO2 emissions from commuting and business travel, as well as sustainable procurement of materials and services.

As a company, we aim to contribute positively to socially relevant initiatives. This can include financial contributions, but above all, we encourage our employees to actively consider how they can apply their expertise and talents to benefit society. Teslin provides employees with the time and space to do so.

Good governance is one of the cornerstones of our vision, values, and investment philosophy. Achieving solid returns and value growth is, of course, our primary objective, but we consider what is above the bottom line to be just as important.

Teslin is an active participant in Eumedion.

Teslin Capital Management BV is a member of DUFAS, the Dutch Association of Investment Funds and Asset Managers. It is actively involved in various committees.

Teslin is a signatory to the United Nations’ Principles for Responsible Investment (PRI).

Since 2015, we have been a signatory of the UN Principles for Responsible Investment and report annually on how we implement these principles. We provide accountability for our ESG policy in public documents, including our Stewardship Report, fund reports, and management reports.