Orion Resource Partners (USA) LP (ORP or Orion), directly or indirectly through its affiliates, provides investment management to various pooled investment vehicles and managed accounts. In connection with its business, ORP strives to adhere to this Responsible Practice and Investment Policy (Policy) and certain responsible investment (RI) procedures with respect to responsible investment factors (RI Factors) relating to its investment activities. This Policy applies to ORP and the funds and managed accounts advised by ORP. Orion has created this Policy to reflect its overarching philosophy with respect to investment activities directed by Orion Mine Finance (OMF), Orion Royalty Resource (ORR), Orion Merchant Services (OMS), Orion Commodities Management LP (OCM), Orion Industrial Ventures (OIV), Orion Resource Equities (ORE), and Orion Structured Finance (OTF). There are specific responsible investment procedures for specific funds, as follows: OMF IV and ORR II Responsible Investment Procedure, and ORE Responsible Investment Procedure. This Policy and its associated procedures are updated on an as-needed basis to reflect what ORP considers to be best practices within the context specific investment strategies.
Orion believes that responsibly produced and processed minerals are key to an even better future. Responsible investment practices and this Policy guide us in our effort to be responsible stewards of our fund clients and investors, who have entrusted us with their investment capital. This Policy guides our stewardship role and reflects our commitment to creating value for our stakeholders.
Orion is committed to exhibiting and encouraging robust practices and performance related to RI Factors for both our own operations and those of our investments. We strive to be the leader in the investment arena for thoughtful and appropriate consideration and integration of RI Factors into our business. Responsible investment principles are a key component to developing strong, resilient companies and assets that deliver long-term value for our investors and we believe consideration of such factors is consistent with our fiduciary duty.
It is the policy of ORP to be a responsible investor and to take into consideration, and where applicable, act on certain RI Factors in the context of its activity as an investor, adviser, and commodity pool operator. Topics considered include, and are not limited to:
- Applicable laws and regulations relating to conflicts metal production and transfer, exchange rules, and policies (e.g., securities and exchange regulators, CME Group, and London Metal Exchange [LME]),
- Views and guidance of civil society and stakeholder groups (e.g., non-governmental organizations),
- Select global responsible investment frameworks and guidelines, and
- Investment restrictions are included in fund or managed account agreements.
Orion has a limited direct operational impact on investments. As a result, we primarily focus on carefully assessing investments made by Orion and working with our portfolio companies to enhance social integrity, environmental protection, ethical business conduct, and respect for workers and communities. Generally, we believe it is more effective to use our influence to attempt to drive change, rather than divest. We do not invest in companies which derive prescribed levels of revenue from the manufacture of controversial weapons as set out in our exclusion policy for our shareholder and policyholder funds. There is international consensus on the inappropriateness of these types of weapons.
Scope and Limitations
This Policy intends to reflect a general framework for our approach to responsible investment across Orion’s internal operations and investment strategies, including our private equity and permanent capital. This document draws distinctions between our responsible investment approach within various investment strategies. We have identified certain materialrisks and opportunities that we believe to be important investment considerations. Our approach to incorporating these considerations is dependent on our influence over the management of each investment, which may vary depending on the investment structure and terms. Our engagements are tailored accordingly.
In our Private Equity and Private Debt investments (in OMF and ORR) we can work closely with our portfolio companies to enhance business and operational practices to achieve more sustainable minerals and metals operations as is detailed in policies specific to OMF and ORR funds. ORP may have limited ability to conduct due diligence or to influence and control the consideration of RI Factors in connection with an investment, whether at the investment or at the fund level. In such cases, Orion only applies those elements of this Policy that it determines to be practicable. Examples of such cases at the investment level include: i) where ORP has limited governance rights or where other circumstances affect ORP’s ability to assess, set or monitor responsible investment performance goals; and ii) for OMS, OCM, ORE, and OTFF investments, at this time.
To integrate responsible considerations into Orion’s processes throughout the investment lifecycle, Orion developed a framework that identifies certain material2 risks and opportunities that we believe to be important investment considerations in the best interests of our investors. This framework draws upon global responsible investment standards and serves to highlight significant risks and opportunities throughout the investment lifecycle. These focus areas are routinely reviewed to reflect current events and macrotrends. Material topical areas include, and are not limited to, those in the following table.
|MATERIAL RESPONSIBLE INVESTMENT TOPICS|
|Greenhouse Gas Emissions & Physical Climate Adaptation||Security, Human Rights & Rights of Indigenous Peoples||Enterprise Risk Management & Critical Incident Risk Management|
|Water Management||Labor Relations & Practices||Business Ethics & Transparency|
|Air Quality||Community Relations||Supply Chain Management|
|Energy Management||Workforce Health & Safety||Business Model Resilience|
|Waste Management & Transition to a Circular Economy||Employee Engagement & Grievance Mechanisms||Management of the Legal & Regulatory Framework|
|Biodiversity & Ecological Impacts||Diversity, Equity, & Inclusion|
|Tailing Storage Facilities Management|
To increase transparency and encourage collaboration with stakeholders, Orion commits to enhance our disclosures with our investors and the level of information publicly available. As part of our development and implementation of our priorities, we rely on our commitments to the PRI and ESG Data Convergence Initiative (EDCI). We engage with our investors, investments, and relevant exchanges on material topics. Orion is a signatory to several commitments, which support us in defining, operationalizing, and prioritizing our responsible investment efforts, including:
- The PRI is a United Nations-supported network of investors promoting responsible investment practices through the incorporation of sustainability factors into investment decisions and active ownership. Orion became a signatory in December 2021.
- The EDCI is an open partnership of private equity stakeholders committed to streamlining the private investment industry’s historically fragmented approach to collecting and reporting on environmental, social, and governance data. Orion became a member in January 2022.
Orion Private Equity Responsible Investment
Since inception, ORP has integrated responsible investment criteria in its investment analysis and decision making for the OMF and ORR investment processes. Orion typically has internal and third-party experts involved with conducting technical and risk assessments of historical and current practices, with prudent consideration of potential future impacts over the life of the investment. Furthermore, we strive to comply with all applicable laws and regulations. We consider integration of these factors a duty to our investors and supportive of Orion’s targets and goals. We do this because we know that operating in a sustainable fashion is accretive to the value of our portfolio companies and therefore for our investors. There is evidence to suggest that companies who take sustainability seriously tend to perform better financially. The specific responsible investment processes for the funds OMF and ORR are as follows:
- OMF Funds I and II diligence procedure.
- OMF Fund III and ORR Fund I Sustainability Procedure.
- OMF Fund IV and ORR Fund II Responsible Investment Procedure (aligning to the European Union (EU) Sustainability Finance Disclosures Regulation (SFDR) Article 8).
Orion Industrial Ventures
Orion is committed to evaluating and enhancing the use of responsible investment risk and opportunity topics in enhancing the value of the OIV investments. OIV integrated such criteria in its investment analysis and decision making. OIV will use internal experts for each deal and engage third-party experts as appropriate, when conducting technical and risk assessments of historical and current practices. This assessment is done with prudent consideration of potential future impacts over the life of the investment. Furthermore, we strive to comply with applicable laws and regulations. We consider integration of these factors a duty to our investors and supportive of Orion’s targets and goals. We do this because we know that operating in a sustainable fashion is accretive to the value of our portfolio companies and therefore for our investors. OIV has a specific investment protocol that aligns to this Policy.
Orion Commodities Management
Orion is committed to evaluating and enhancing the use of environmental, social, and governance risk and opportunity topics in enhancing the value of the OCM investments. The primary aim is to engage with stakeholders to develop approaches to better incorporate such topics into investment programs focused on commodities, hedge funds, and other like-kind investments. Stakeholders include the PRI, CME, LME, and other organizations and forums. OCM strives to consider environmental, public health, safety, and other social issues associated with target investments in metals-based futures and physical metals positions (i.e., warrants) when evaluating whether to invest in such assets and incorporate such issues into our investment analysis and decision-making. The focus is on the countries from which certain mineral products are derived.
We maintain awareness of current responsible investment topics through propriety research or third-party information services (e.g., consultants and law firms). OCM works to be aware, to the extent possible, of the potential RI Factors associated with the relevant commodity in the source country for materials traded or owned through: i) periodic review of new and existing laws, regulations, and exchange rules, and ii) information provided by inter-government organizations (e.g., OECD), non-governmental organizations (NGOs), and regulators. OCM evaluates whether to trade in or take physical ownership of such materials in instances where significant controversy exists, or materials are fungible based on exchange designations. Regarding human rights and governance, OCM:
- Acknowledges extractive industries can operate in high-risk locations and be subject to human rights issues.
- Respects the rights of those affected by our investment activities through ongoing awareness and education on specific jurisdictions and materials.
- Seeks to be informed that our investments do not flow to jurisdictions that utilize child labor or forced labor, breach human rights, or maintain other discriminatory policies.
- Works to maintain awareness of applicable restrictions and sanctions relating to extractive industries or companies involved in the production of metals such that our trading is not at odds with government policies or restrictions.
- Strives to maintain policies that prohibit bribery and other improper payments to public officials consistent with applicable laws.
Orion Resource Equities
Orion is committed to evaluating environmental, social, and governance risk and opportunity topics to enhance the risk-adjusted returns of ORE’s portfolio. ORE integrates criteria for these topics in its investment process analysis and decision making. ORE aligns to the EU Undertakings for the Collective Investment in Transferable Security (UCITS) and EU SFDR Article 8. Orion strives to comply with the applicable laws and regulations. We consider integration of these factors a duty to our investors and supportive of Orion’s targets and goals.
We do this because we know that operating in a sustainable fashion is accretive to the value of our portfolio companies and therefore for our investors. ORE has a specific investment procedure that aligns to this Policy and summarizes various processes, including the exclusion policy, annual screening and scoring process, and divestment assessment process.
Orion Structured Finance
Orion is committed to evaluating and enhancing the use of material risk and opportunity topics in enhancing the value of the OTF investments. OTF integrates a high-level evaluation of environmental, social, and governance topics in its investment process analysis and decision making. We consider integration of these factors a duty to our investors and supportive of Orion’s targets and goals. We do this because we know that operating in a sustainable fashion is accretive to the value of our portfolio companies and therefore for our investors. OTF has a specific investment procedure that aligns to this Policy.
Reporting and Transparency
ORP will provide an annual update regarding responsible investment efforts in the investment process and portfolio management at its annual meeting and to the Limited Partner Advisory Board. Orion incorporates material sustainability information in its internal reporting and notifies LPs as required in the event of any material incidents and corrective actions occurring within its portfolio companies.
Policy Governance and Compliance
The ESG Committee maintains and oversees implementation of this Policy and associated procedures. This includes ensuring that deal teams and the Investment Committee are informed of the Policy and related procedures and their requirements, and are provided with the requisite tools, training, and capacity-building to allow for effective implementation. The ESG Committee conducts a review of the Policy and tests implementation on an annual basis (and as needed). The ESG Committee seeks periodic input from deal teams on implementation and effectiveness of the Policy. Results of the annual review and testing are used to determine whether: i) updates to the Policy or any of its supporting tools are warranted; and ii) additional training or capacity-building is needed. The Director ESG provides updates about key developments and best practices within its relevant investment industries and periodically considers changes and additions to the Policy based on those developments.
- OMS is a service provider to various Orion funds. As such, it aligns to protocol(s) for the relevant funds when said services are provided.
- For the purposes of this Policy, “material” responsible investment topics are defined as those that Orion determines have or have the potential to have a material impact on an organization’s going-forward ability to create, preserve or erode economic value, as well as environmental and social value, for that organization and its stakeholders.
- Global responsible investment standards and frameworks considered include: United Nations supported Principles for Responsible Investment (PRI), World Resource Institute (WRI), Sustainable Accounting Standards Board (SASB), Global Reporting Initiative (GRI), International Finance Corporation (IFC) Performance Standards (IFC Standards), Equator Principles version 4 (EP4), European Bank for Reconstruction and Development (EBRD), Organization for Economic Cooperation and Development (OECD), Sustainable Finance Disclosure Regulation (SFDR), Task Force on Climate-related Financial Disclosures (TCFD), Canadian Dam Association (CDA), and existing Orion policies and processes.
- This includes requesting companies utilize the Integrated Biodiversity Assessment Tool (IBAT) Integrated Biodiversity Assessment Tool (IBAT) (ibat-alliance.org).
- This refers to compliance at a minimum with the most recent CDA, Application of Dam Safety Guidelines to Mining Dams tailings standard or comparable guidelines.
- This refers to compliance at a minimum with the most recent CDA, Application of Dam Safety Guidelines to Mining Dams tailings standard or comparable guidelines.
- PRI website,https://www.unpri.org/investment-tools/stewardship. https://www.ifc.org/wps/wcm/connect/Topics_Ext_Content/IFC_External_Corporate_ Site/Sustainability-At-IFC/Business-Case/
- As an example, in the past OCM has not invested in physical cobalt as a commodity due to the geopolitical and human rights risks where cobalt is primarily mined.
- A “Material Incident” is one of the following which materially and adversely affects any employee, customer, supplier or other person who has dealings directly with a portfolio company or which occur at any site, plant, equipment or facility of any portfolio company:
- an incident resulting in death or permanent material physical injury to any person.
- an incident which has a material negative impact on the environment or the health, safety and security situation in the vicinity of such company’s physical location (including without limitation any explosion, spill or workplace accident which results in death, permanent material injury or injuries or material environmental contamination).
- an incident of an adverse social nature (including without limitation any violent labour unrest or dispute with local communities), which has or is reasonably likely to have a material negative effect on the social and cultural context within such company or in the vicinity of such company’s physical location.