Responsible Investment - Teewinot Capital Advisers

This policy summarizes Teewinot Capital Advisers, LLC (“Teewinot”)’s commitment and approach to Responsible Investment (“RI”) and the integration of RI factors into the investment process.

As an investment manager, we affirm the importance of RI analysis in considering the sustainability of businesses. Given the long duration of our investing time horizon, we believe it is all the more critical to include RI factors in our fundamental research. Teewinot became a signatory of the UN-supported Principles for Responsible Investment (PRI) in 2020 and is committed to adhering to the six Principles for Responsible Investment.

This Responsible Investment Policy covers the approach to responsible investing for all assets under management of Teewinot. The primary objective of incorporating RI factors into investment analysis and decisions is to manage potential risks and opportunities which may have a financial impact on the investment thesis. In our view, RI analysis is aligned with our fiduciary duty to strive to maximize risk adjusted returns subject to each individual mandate. In addition, considering RI factors helps Teewinot develop a deeper understanding of sustainability issues and potentially reduces detrimental sustainability outcomes.

Responsible Investment

Teewinot has appointed responsibility for overseeing the ongoing development of the firm’s RI Policy and its implementation to its senior leadership team. They are supported in this by a Responsible Investment Committee.

RI Integration

Environmental

Environmental issues require forward-thinking to anticipate how demand and costs may evolve. We consider environmental factors, such as climate change, biodiversity and water usage as part of our investment analysis and expect our companies to comply with ethical resource stewardship.

Social

Social issues will similarly require a forward view. Companies that proactively address areas such as diversity are likely better at balancing the interest of their various constituents – shareholders, employees and community. We consider the culture of a company to be critical in driving shareholder value.

Governance

We assess both management and board character by looking at experience and tenure, as well as the structure of compensation and the degree of aligned interests. We consider transparency in shareholder communications of strategic objectives and in the accounting for financial statements to be particularly important.

Exclusions

In addition to observing specific fund mandate required exclusions, Teewinot has established its own ethical framework.

Teewinot avoids geographies where we deem rule of law as an overwhelming risk, for example Russia.
Sectors may be excluded for various reasons, including certain commodity-related sectors.
We may avoid business-types where we deem the business to provide a negative social cost, for example, tobacco or cannabis.

We also exclude businesses where the primary business activity is any of the following:

Weapons – Production, sales or distribution of handguns, assault weapons or other similar firearms for individual/civilian use and controversial weapons (such as anti-personnel mines, chemical and biological weapons, and depleted uranium and nuclear weapons) to controversial governments.
Predatory Lending – Lending practices that may impose deceptive or exploitative loan terms on consumer borrowers.
Adult Entertainment – Production, sale or distribution of adult content.
Tobacco – Production, sales or distribution of tobacco products, including cigars, cigarettes, e-cigarettes, smokeless tobacco, raw tobacco leaves, dissolvable and chewing tobacco.
Cannabis – Production, sales or distribution of recreational and/or medical cannabis.

RI Research Process

RI considerations are integrated into Teewinot’s fundamental research process. The research team is familiar with areas of concern, and each analyst meets with the RI Committee to discuss scoring, engagement issues and proxy voting on respective companies under coverage.

Stewardship

Our primary stewardship objective is to maximize overall value to our clients, and we are open to collaborative engagement when opportunities present. We prioritize our stewardship activities based on a number of factors, including the level of influence we believe we may have in the engagement (related to size of position), the duration of our investment, the specific topic we are engaging on, the scale, scope and materiality of the issue as well as whether we believe the issue to be financially material to the investment opportunity.