ESG Policy

Policy as at:


We are committed to building our business for the long term. To this end, we consider the sustainability of the investments we make and aim to operate our business in a sustainable manner

ESG Approach

Acting responsibly is a key part of our investment philosophy. As an investment company, our purpose is to grow capital value and income over the long term, creating an increasing store of generational wealth for our shareholders. We believe that a responsible approach towards the businesses in which we invest is essential to our continued success and is closely aligned with the risk management considerations of a long-term investor.

We believe that responsible investment and business success go hand in hand. We are embedding the consideration of Environmental, Social and Governance (‘ESG’) factors into all stages of our investment journey. We remain committed to constructive, long-term focussed engagement with the companies and funds in which we invest and believe that careful stewardship is a key tool to address ESG risks and drive positive change. We expect to invest in businesses which will grow, provide employment and generate economic benefit in an environmentally and socially responsible way, both during and after our ownership. We aim to invest in companies and funds that take a responsible approach towards the environment and society, built on good governance practices.

Standards & Codes

Historically our stewardship activities have focused primarily on governance matters, most notably in our majority owned investee businesses which we seek to operate in line with industry good practice. However, we continue to build on this approach by incorporating ESG matters into our investment decision making to ensure that a broader spectrum of issues that are important to us are formally evaluated alongside other key investment criteria. We expect our investment managers to consider these issues fully in proposing new additions to our portfolio holdings.

We recognise the importance of communicating both financial and non-financial ESG performance clearly to our stakeholders. We have considered our approach to the recommendations of the Taskforce on Climate-Related Financial Disclosures (‘TCFD’) and have provided a full set of disclosures in our annual report.

ESG Considerations

Historically our stewardship activities have focused primarily on governance matters, most notably in our majority owned investee businesses which we seek to operate in line with industry good practice. However,  we continue to build on this approach by incorporating ESG matters into our investment decision-making to ensure that a broader spectrum of issues that are important to us are formally evaluated alongside other  key investment criteria. We expect our investment managers to consider these issues fully in proposing  new additions to our portfolio holdings.

We know that ESG considerations are important to our shareholders and broader stakeholders. In the past year we introduced a Responsible Investment/Responsible Corporate Working Group, chaired by the CEO and involving senior representatives from each investment pool, the CFO, the Company Secretary and other key corporate managers. This group advises and assists in  the continued development and implementation of Caledonia’s approach to ESG matters, ensuring that there  is an aligned approach across the business and that ESG matters are appropriately factored into decision-making processes. This group has also developed an increased understanding of climate-related matters and has supported the development of our reporting on this topic.

We continue to meet with our shareholders to discuss  our approach to ESG matters and listen to any concerns they may have.


Stewardship – Quoted Equity

We aim to invest in global businesses with recognised brands, intellectual property and strong market positions, that have a good track record of delivering returns. Our approach means that we do not generally invest in capital intensive businesses or any companies involved in the extraction and production of coal, oil or natural gas. 

Our Quoted Equity team will meet with company management to consider the factors they consider important that will affect the company’s ability to deliver long term sustainable value to shareholders. These factors include, but are not limited to corporate strategy, operating performance, competitive positioning, corporate governance, remuneration, reputation and litigation risks, deployment of capital, regulations and any other risks or issues facing the business. Where appropriate we seek open and constructive dialogue with management and board members to broaden our knowledge of company strategy, operations and risk identification and management, and to ensure any concerns we have are assuaged. If we become aware of a significant governance issue, a member of the Quoted Equity team will make clear our concerns and expectations. The level of interaction with each investee company will vary significantly depending on the company’s plans and performance; and will be greater with companies where we have a more significant presence on their shareholder register.

We make considered use of our voting rights and vote our stock ahead of all shareholder meetings. As a consequence of our involved investment style, we expect to vote in line with management recommendations but are prepared to abstain or vote against resolutions where we consider they are not in the interests of our own shareholders.

Stewardship – Private Capital

Caledonia Private Capital invests in established businesses, across a range of sectors, that have robust operating margins, strong management teams and good growth opportunities. Where these businesses operate in regulated sectors, we monitor compliance and the maintenance of positive working relationships with the relevant regulatory authorities.

We introduce a high standard of corporate governance into these businesses, generally with an independent, experienced non-executive chair and a structure that includes formal audit and remuneration committees. Our Private Capital team take non-executive roles in these businesses and use their positions to maintain close relationships with the management teams. The boards of our portfolio businesses are responsible for their development, with only a limited number of matters reserved for consideration by Caledonia as shareholder.

We hold frequent meetings with management which cover a wide range of subjects, including ESG matters, and regularly review performance. There is a close dialogue with each business when formulating plans, budgets and forecasts, with ongoing analysis of performance against plan. This information is shared within the Private Capital team and also with Caledonia’s corporate functions and the board.

Our Private Capital team, particularly the senior executives, maintain a very high level of engagement with the senior management of portfolio companies. Our Chief Executive and CFO also build strong linkages with the management teams of the businesses. Ordinarily Caledonia’s executive and non-executive directors attend an annual event which enables them to meet with the senior management from portfolio businesses and to receive an update on progress in each business, together with a programme of regular presentations to our board. This is supplemented by periodic site visits.

Stewardship - Funds

Our Funds team invest into a mix of private equity funds in Asia and North America, balanced between direct investment into general partner funds or into corporate fund of funds structures. We expect managers to consider all factors, including ESG matters, when seeking to maximise returns while taking account of the associated risks. In all cases we will assess the capability of the senior management of the fund and the governance structures in place to support decision making, remuneration and performance reporting. We make long term investments, so it is critical that these elements are in place and operating robustly. Our investment decisions are heavily influenced by management capability and track record.

Our Funds team maintain a high level of engagement with the principals and senior management of the funds into which we invest. This is achieved by regular in territory meetings and attendance at more formal annual meetings. In some cases, our Funds team represent us on the advisory board of the funds in which we are invested. This provides greater insight into the approach taken by the fund and their future plans. Such roles are advisory in nature, but they provide a platform for stronger engagement with, and potential influence of, the relevant manager. Other members of the Caledonia Executive Committee will often meet with the principals from our larger fund investments when they visit the UK.

Environmental factors

Climate change

Addressing the threats and consequences of climate change will require significant structural change in societies and economies. This will lead to value creation and destruction across companies, industry sectors and investment portfolios. Against this backdrop we recognise a need to support the journey to net zero. We are committed to supporting a sustainable future as we deliver investment performance for our shareholders  over the longer term.

The climate challenge and the transition to net zero 

We recognise the challenges of climate change and the likely material risk this poses for the investments which  we make, potentially from regulation, adjustments in consumer preferences or pressure to reduce carbon emissions and address broader environmental issues.

As a company committed to sustainability, we plan to continue to reduce our operational carbon footprint  with relevant targets and plans. However, our biggest environmental impact is through the companies and  funds we own – emissions from our investment portfolio are orders of magnitude greater than our operational emissions. For this reason, we focus on engaging with our investee companies and funds. Our role as an active owner provides the opportunity to drive challenge and change across multiple businesses and sectors in pursuit of superior risk-adjusted returns.

Our investments

We have set an expectation that the businesses in which we invest should target net zero emissions (Scopes 1 and 2, market-based) by 2050. We recognise that the pace of planning and delivery of this commitment will vary across the businesses in our investment portfolio, and we anticipate that many businesses will achieve this target more swiftly. We will keep this commitment under review as we gain confidence in the ability of our underlying holdings to achieve the target more rapidly. We plan to implement suitable monitoring and reporting to enable us to track progress.

We intend to use our position as an investor to encourage progress on reaching net zero. Where we own listed securities, we will use our influence through engagement and voting to encourage companies to plan and demonstrate the actions they have taken to address climate risks and opportunities. For the private businesses where we own significant positions, we will seek to ensure that these companies understand and manage their own environmental impacts, and encourage them to invest in suitable technology to improve energy efficiency and make a successful transition to renewable energy and a low carbon future. We will encourage our fund managers to consider the risks and opportunities presented by climate change in their investment selection process and to promote initiatives to reduce emissions from the businesses within their funds.

Charitable activities

We have established an ongoing commitment to the wider community via The Caledonia Investments Charitable Foundation and also to foster further employee involvement in the community. We have continued efforts to advance greater talent diversity in our sector.

The Foundation is the focus for Caledonia’s charitable activity, providing support to many good causes each year. The company made a grant of £250,000 to the Foundation during the year from which numerous charities received varying levels of support. Notable multi-year donations were provided to The Cornwall Community Foundation which seeks to improve the lives of individuals within Cornwall, to the Maritime Volunteer Service to train its members in maritime, engineering, operations and communications skills and to purchase equipment, and to Horatio’s Garden for the continued development of gardens in NHS Spinal Injury wards. Other donations included those made to Joshua Orphan and Community Care to provide food to children in rural Malawi, to The Big Yellow Foundation to support vulnerable people including ex-offenders, refugees, ex-service personnel and people living with disabilities to find employment and create a better future for themselves, and to SeeAbility to help people with learning disabilities, autism and sight loss find permanent paid work. During the year we also implemented a new volunteering policy to further encourage staff to support the Foundation, together with other charities and good causes, by providing up to two additional days of paid leave each year.