Environmental, Social and Governance (ESG) and Responsible Investment (RI) Policy

Purpose 

The purpose of this policy is to define Talomon Capital’s approach to integrating the consideration of  environmental, social, and governance (ESG) factors in its investments both in the evaluation phase of these investments, as well as in the active ownership phase post investment.

We will monitor ESG best practices continuously and will seek to update this policy continually as  appropriate.

Talomon Capital Limited is committed to responsible investment and has been a signatory to the  UN’s Principles for Responsible Investment since the firm’s launch.

The policy covers the entire asset base, across asset classes (Talomon Capital is principally an  investor in listed equities).

Goals 

In relation to Talomon Capital’s investment activities, we seek to

1. Undertake due diligence on the environmental, social, governance, public health, safety and  sustainability issues associated with the companies we are assessing for potential  investment.

2. Document the findings of this due diligence into our investment memoranda for  consideration in our investment decision-making.

3. Refrain from investing in companies where material red flags on ESG topics are discovered.

4. Take the role of an active, responsible, long-term owner towards the companies we invest in  to grow and improve these companies, with the goal of also improving performance and  minimizing adverse impact in ESG areas. We will also vote in accordance with this role. 5. Support compliance at investee companies with applicable national, state, and local labour  laws in the countries in which they invest; support the payment of competitive wages and  benefits to employees; provide a safe and healthy workplace in conformance with national  and local law; and, consistent with applicable law, respect the rights of employees to decide  whether or not to join a union and engage in collective bargaining.

6. We will support policies at investee companies that prohibit bribery and other improper  payments to public officials consistent with the US Foreign Corrupt Practices Act, similar  laws in other countries, and the OECD Anti-Bribery Convention.

7. We will respect the human rights of those affected by our investment activities and seek to  confirm that our investments do not flow to companies that utilize child or forced labour or  maintain discriminatory policies.

8. We will provide timely information to our investors on the matters addressed herein, and  work to foster transparency about our activities on these matters

9. Address any ESG issues that come to light post our investment directly with the  management team and board of the company in question with a view to fostering  improvement and fixing these issues.

In relation to Talomon Capital’s own operations, we seek to

1. Use governance structures that provide appropriate levels of oversight in areas of disclosure,  valuation, audit, risk management and potential conflicts of interest and to implement  compensation and other policies that align the interests of management and investors.

2. Provide as much transparency to our investors as necessary on governance structures, fund  terms and conditions, and our investment strategies and techniques.

3. Apply investment strategies and techniques which are consistent with responsible investing

Talomon Capital’s Approach to Integrating ESG Factors into its Investments 

Talomon Capital will seek to integrate the consideration and thoughtful management of ESG issues  throughout the investment cycle.

3.1 Pre-investment 

As a standard practise for all of our investments, Talomon Capital will:

Undertake ESG due diligence: Due to our long-term investment approach, analysing the  performance of potential investee companies on ESG factors forms an integral part of our  investment process. If a potential investee company displays poor performance on ESG matters, it is  often indicative of other issues as well, such as a lack of a long-term oriented management team or  lack of a robust business culture. This underperformance may also in the future lead to issues with,  inter alia, brand perception, talent attraction and customer churn. As such, it is key for us as a long term investor that the companies we invest in are strong performers on ESG areas to maximize value  for both shareholders as well as other societal stakeholders.

When evaluating a thematic rather than a company specific investment idea, we conduct various  industry wide screens to help us analyse which company offers the best risk/reward when  expressing this thematic view. This screening will also include a consideration of ESG criteria, which  often enhances the company specific risk/reward.

The evaluation of ESG related risks and opportunities is carried out by our investment team  experienced in director roles in sizeable operational companies and is further supported by our  Operating Partner team of CEO level executives as appropriate.

Document findings on ESG-related issues for consideration in our investment decision-making: Any  red flags or identified ESG issues are documented in our investment memoranda for consideration  by our investment committee. Any uncovered issues will be considered material investment risks and will significantly decrease the likelihood of Talomon Capital Limited investing in the company in  question on a long basis.

Below is a high-level summary of some of the topics that we focus on along the ESG dimensions both  on the level of the industry the company is operating in, as well as the company’s own performance  in relation to its industry peer group:

Environmental

The depletion of natural resources and the threat of climate change have raised concerns about the  environment and the potential impact on various stakeholders both in a business context as well as  in the wider society. High or low performance on the environmental side can therefore have a  significant impact on an industry’s or company’s future performance. Key themes for us include, but  are not limited, to:

• Climate change (please see further detail below)

• Carbon footprint

• Water usage

• Resource consumption

• Waste management

Climate change

It is widely viewed that climate change is the highest priority ESG issue facing investors and one of  the biggest threats facing society today. When considering climate change and the associated effect  on government policy, we look to both protect our portfolios from risks and look to benefit from  opportunities that may arise in the shift to a low-carbon global economy.

Talomon Capital Limited is conscious and supportive of efforts to limit global temperature rises to  substantially below two degrees Celsius above pre-industrial levels, the need to dramatically curb  worldwide emissions and achieve carbon neutrality.

As active investment managers, we are conscious that our decisions can affect positive change. We  are committed to tackling the impact of climate-related risks and take these into consideration  during our due diligence on individual companies. As shareholders, it is also our responsibility to  engage with companies and to use all tools at our disposal to encourage them to act in a responsible  manner.

As a result, our approach concerning the topic of climate change centres around:

• Risk mitigation

Any climate change issues identified are documented in our investment memoranda for  consideration by our investment committee, alongside our wider ESG risk analysis. Issues and  related risks uncovered on existing portfolio companies are investigated fully and presented to the  investment committee for action.

• Active stewardship

We engage with companies to consider reforms which will help mitigate the threat of climate  change, encouraging corporations to act in the best interests of their shareholders and society as a whole.

• Corporate responsibility

We view reducing our own carbon footprint as a core corporate responsibility. Social

Inclusion, diversity and equality are continuously becoming more and more important  considerations for a wide range of stakeholders and can therefore either generate competitive  advantage or erode it. We look at the impact a company has on its employees, local communities  and society. Key themes for us include, but are not limited, to:

• Employee training and satisfaction

• Sustainable, traceable and ethical supply chain

• Health and safety

• Cybersecurity

• Demographics

• Affordability and access

• Stakeholder relationships

Governance

Corporate governance covers the rights and responsibilities of the management of a company – its  structures, corporate values and accountability processes. Key themes for us include, but are not  limited, to:

• Board structure, diversity and effectiveness

• Remuneration

• Regulation

• Bribery and corruption

• Political lobbying and donations

• Tax

• Incidents

Culture

We often look at company culture as an additional dimension because a company’s or industry’s  culture often has a systematic impact on many of the above factors. A short-term oriented company  culture that disregards the long-term development of the long-term development of a business will  often have a halo effect on many aspects of a company’s business. Key themes for us include, but  are not limited to:

• Integrity of board and management

• Time horizon of strategy and business planning

• Reporting and communication transparency

• Incentive structures

• Treatment of employees

3.2 During investment

We monitor each of our investments closely both through active dialogue with the company’s top  management as well as through various industry checks and contacts. The primary purpose of this  monitoring is to continue to ensure our original investment thesis, including our view on the  company’s ESG performance, remains valid.

Should ESG issues come to light, we will address these directly with the company’s board and  management team as an active, long-term shareholder and will also consider these factors when  exercising our voting rights.

Engagement Principles 

When we actively engage with a company, ESG issues will often be a key driver. Given the long-term  investment horizon of Talomon, ESG risks pose a significant risk to the value of our investments. We  may look to engage on ESG issues either in a preventative sense or in a reactive sense.

Methods of engagement: Our engagement with companies may take various forms depending on  the situation. We typically prefer in the first instance to meet with the Chairman, CEO, CFO, board  representatives and IR managers to begin a constructive dialogue, but may also engage via letters,  emails, and site visits, among other options. Depending on the topic, we may look to engage as

Talomon Capital Limited or via a collaborative engagement – our approach will be considered on a case by case basis.

Prioritisation of engagements: We will always look to uphold dialogue with a portfolio company’s  senior management, although we will not always look to actively engage if we have found no issue  with which to engage on. We will prioritise those engagements where we can have the maximum  impact.

Insider information: In the occurrence when we inadvertently receive non-public material  information when engaging with a firm, the company name is immediately placed on our Restricted List, meaning the name cannot be traded in line with our Market Abuse policy and procedures.

Escalation strategies: In the event of an unsuccessful engagement we may decide to take another  course of action that maybe include but not be limited to; collective engagement (if initial  engagement was singular), public statements, overweight/underweight holdings, filing resolutions,  voting against re-election of responsible directors, divestment, and/or litigation.

Transparency: We aim to provide as much transparency to our investors as necessary on governance  structures, fund terms and conditions, and our investment strategies and techniques. All  engagement activities are monitored and documented internally. Our engagement activities are  then noted in our ESG transparency reporting which is completed biannually and is available on  request.

Voting on ESG issues: There are a variety of factors that we consider when making voting decisions.  Some of the factors are listed in 3.1, and will be reviewed together with our wider internal  investment work.

Decision-making processes: Voting decisions are made internally by the investment team based on  our internal investment work, and without the use of proxy voting advisors. The COO then ensures  voting decisions are conducted as instructed in line with the Proxy Voting policy.

Methods: Voting is conducted via proxy.

Company dialogue pre or post-vote: We reserve the option to engage with the company prior to or  following the vote being cast.

Securities lending process: We reserve the right to recall all securities for voting on all ballot items.

Transparency: All voting activities are documented internally. Our voting activities are then noted in  our ESG transparency reporting which is completed biannually and is available on request.

Talomon Capital’s Approach to Responsible Investment in its own  

Operations 

Talomon Capital will foster responsible investment practises across its operations:

Governance: We believe implementing robust governance and oversight mechanisms is in the  interest of our investors and therefore in the interests of our firm. When considering the domicile of  our funds, we will always have a preference towards jurisdictions with appropriate governance and  regulatory frameworks in place. Similarly, we will look to have independent directors on our fund  boards to ensure independent oversight on valuation, audit and risk management practices.

In terms of the current funds under management, Talomon Capital acts as the investment manager  to Talomon Value ICAV, a collective investment scheme domiciled onshore in Ireland. The majority  of the directors of Talomon Value ICAV are independent from Talomon Capital.

Investment strategies: As a firm, we take a long-term approach to investing in listed equities and  our typical investment horizon for any given investment is two to five years. We consider ourselves a long-term, active owner of the companies we invest in. We do not engage in high-frequency trading  or other short-term oriented trading strategies.

Reporting: Talomon Capital Limited completes Fund level ESG activity reporting. The reporting sets  out our ESG activity over the period, including but limited to ESG related due diligence activities,  case studies and company engagement activities with a view of transparency of our process and our  ESG activities over the period, and to highlight the value ESG brings to our process. Reporting is  completed on a biannual basis.

ESG training: In order to ensure firm-wide understanding and the upkeep of best in class ESG  methods and approaches, we conduct ESG training. Training is completed on an annual basis.

Remuneration: In order to ensure alignment of interests with our investors, bonuses and net profit  share payments to Talomon Capital employees are always paid partly in fund units with the units  vesting over time, in line with the firm’s remuneration policy.

Transparency: Talomon Capital provides detailed risk information to its investors as well as full  transparency on all fund terms – such as risk limits, lock-ups, investment gates, concentration and  liquidity levels.

Derivatives: Talomon Capital typically does not utilize derivatives as part of its investment process.  This is done very rarely for return enhancement and/or risk management purposes but does not  form a core part of any of the firm’s investment strategies.

Short selling: Talomon Capital acts as an investment manager to both a long/short equity  investment strategy (Talomon Value Fund) and a long only equity investment strategy (Talomon  Value Long Fund). The latter fund does not utilize short selling as part of its investment approach  whereas the former does. When shorting, we look to identify and short overpriced securities to  create alpha and returns for our investors. We do not engage in activist shorting and typically do not  publicly speak about our short positions. We do not carry out naked shorting (shorting without first  borrowing the shares being sold). We do not borrow shares for the purpose of voting.

Leverage: We typically employ only low/moderate amounts of leverage as part of our investment  strategy. In the Talomon Value Fund, gross exposure is capped at 200% and with targeted gross  exposure at 125-175%.

Conflicts of interest: Please see Talomon Capital Limited’s Conflicts of interest policy.

Fiduciary duties: We abide by our fiduciary duty to our clients with regards to all our activities  including ESG, engagement and voting activities and will act within the best interest of the funds we  manage or advise to maximise value to their underlying clients. Please see our Compliance Manual  for further details.

UN’s Principles of Responsible Investment 

Talomon Capital is a signatory to the UN’s Principles for Responsible Investment which are  embedded in Talomon Capital’s workflows, procedures and investment principles.

Principle 1: We will incorporate ESG Issues into investment analysis and decision-making processes.

Principle 2: We will be active owners and incorporate ESG issues into our ownership policies and  practices.

Principle 3: We will seek appropriate disclosure on ESG issues by the entities in which we invest.

Principle 4: We will promote acceptance and implementation of the Principles within the investment  industry.

Principle 5: We will work together to enhance our effectiveness in implementing the Principles.

Principle 6: We will each report on our activities and progress towards implementing the principles.