Georgia Capital PLC

# Governance Structure

The Investment Committee has overall responsibility for the RI Policy and its implementation for the review and approval of any material changes. The Audit and Valuation Committee retains responsibility for matters which fall into its Terms of Reference which can be viewed at [https://georgiacapital.ge/governance/cgf/terms.](https://georgiacapital.ge/governance/cgf/terms)

The Chairman of the Investment Committee summarises proceedings to the Board (after meetings or at least quarterly), and makes recommendations, if deemed appropriate, on area where action or improvement is needed. The Chairman of the Audit and Valuation Committee does the same for matters within the remit of the Audit and Valuation Committee.

At a management level, the Director of Investments is responsible for the implementation of the RI Policy. He may be assisted by the investment team, Finance, Investor Relations and the Legal departments (both Georgian and UK) as appropriate, alongside others.

The Finance Department, overseen by the Chief Financial Officer (CFO), reports on monitoring of identified financial and climate-related risks and significant changes through its regular reports to the management Board. Risks are escalated to the Audit and Valuation Committee.

The CEOs of the portfolio companies are responsible for implementing the ongoing RI Policy requirements which directly affect their company and for reporting data to the Finance Team.

The Board is entrusted with providing oversight of climate-related risks and opportunities, aided by the Audit and Valuation Committee. The Audit and Valuation Committee and the Board have responsibility for assessing and managing climate-related risks and opportunities in relation to GCAP's direct operations and to our portfolio companies, as they affect matters within their remit. [...] Within the management team, the Chief Financial Officer, supported by the finance team, is responsible for identifying risks, including climate change risks, in relation to the investment portfolio and including these in the valuation process. The Director of Investments, supported by the Investment Officers, is responsible for identifying specific risks and opportunities at the initial investment stage. [...] The Chief Financial Officer and Director of Investments report on monitoring of identified financial and climate-related risks and significant changes through their regular reports to the Management Board. Risks are escalated to the Audit and Valuation Committee.

In order to effectively manage the Group's direct and indirect impact on society and the environment, the Board of Directors has adopted a Code of Conduct and Ethics, as well as policies concerning climate change, environmental and social matters, employees, anti-corruption and anti-bribery. [...] Georgia Capital adheres to the Responsible Investment Policy, which is integrated into the investment and portfolio management processes and procedures. Georgia Capital monitors the portfolio companies' ESG performance and uses the resources to encourage the adoption of ESG best practices. This policy covers Georgia Capital's responsible investment approach. It is supplemented with a dedicated Environmental and Social Policy. [...] The Board has overall responsibility for the policy and its implementation, and for the review and approval of any material changes. [...] The Director of Investments is responsible for the implementation of the policy. He may be assisted by the investment team, Finance, Investor Relations and Legal departments (both Georgian and UK), and advisors. [...] The Finance department, overseen by the Chief Financial Officer, reports on the monitoring of identified financial and climate-related risks and significant changes through its regular reports to the Management Board. [...] The CEOs of the portfolio companies are responsible for implementing the ongoing Responsible Investment Policy requirements which directly affect their company and reporting data to the finance team.

Georgia Capital adheres to the Responsible Investment Policy, which is integrated into the investment and portfolio management processes and procedures. Georgia Capital monitors the portfolio companies' ESG performance and uses the resources to encourage the adoption of ESG best practices. This policy covers Georgia Capital's responsible investment approach. It is supplemented with a dedicated Environmental and Social Policy. [...] The Responsible Investment Policy can be found on our website: https://georgiacapital ge/governance/cgf/policies [...] Georgia Capital's primary business is to develop or buy businesses, help them develop their management capacity and institutionalise their businesses so that they can continue to evolve and flourish on their own. Through the Responsible Investment Policy, ESG considerations are embedded into the entire deal process, from the initial investment stage to active ownership. [...] Georgia Capital has a staged approach to investment appraisal which becomes progressively more detailed. At the early stages of appraisal, the potential investment is screened against the GCAP Exclusion List. This list excludes businesses that generate more than 10% of their revenues from fossil fuels. Subsequent appraisal stages include evaluation of the carbon and energy emissions, as well as business strategy and plan elements in relation to carbon and energy management. These plan elements will consider alignment with the Georgian Government Climate Goals and incorporate the shadow carbon price. [...] As part of our ongoing ESG assessment process, each business is reassessed on a semi-annual basis and we follow up to ensure appropriate actions are taken to improve as required. The Board has ultimate responsibility for risk, and the Management Board has delegated responsibility for risk management. The Group's risk management for ongoing investments is primarily managed by the Finance department. Consequently, the Chief Financial Officer regularly monitors the environmental and social risks associated with its activities. The Finance department reports to the Management Board periodically on the ongoing responsible investment risk across the portfolio companies. The Management Board reviews the reports and takes actions and escalates as necessary to the Investment Committee, or the Audit and Valuation Committee if the issue is within their remit.

Describe the process(es) your organization has in place to ensure that your engagement activities are consistent with your overall climate change strategy[…]In line with our integrated control framework, we carefully evaluate the impact of legislative and regulatory framework part of our formal risk identification and assessment processes and, to the extent possible, proactively participate in the drafting of relevant legislation. As part of this process, we engage where possible
in constructive dialogue with regulatory bodies and seek external advice on potential changes to legislation. We then develop appropriate policies, procedures and controls as required to fulfil our compliance obligations. Our compliance framework, at all levels, is subject to regular review by Internal Audit and external assurance providers. This process may include climate-change-related matters.

Regarding the goals of the Paris Agreement, we are currently in the process of evaluating the quantitative aspects of the transition, which considers a detailed and comprehensive assessment of our individual portfolio companies' operations. At the GCAP holding company level, our GHG emissions are insignificant as we are not engaged in direct business operations. The largest portion of our total GHG emissions derives from Scope 3 emissions under which we report the aggregated amount of Scope 1, 2 and 3 emissions of all our private portfolio investments. Following the completion of the assessment, we intend to design a transition plan, considering respective targets and KPIs at both GCAP Holdco and portfolio companies' levels, which will, among other factors, contribute to the transition towards the low carbon economy which will contribute to the goals of the Agreement.

Describe the process(es) your organization has in place to ensure that your external engagement activities are consistent with your climate commitments and/or climate transition plan?[…]In line with our integrated control framework, we carefully evaluate the impact of legislative and regulatory framework part of our formal risk identification and assessment processes and, to the extent possible, proactively participate in the drafting of relevant legislation. As part of this process, we engage where possible in constructive dialogue with regulatory bodies and seek external advice on potential changes to legislation. We then develop appropriate policies, procedures and controls as required to fulfil our compliance obligations. Our compliance framework, at all levels, is subject to regular review by Internal Audit and external assurance providers. This process may include climate-change-related matters.

Does your organization have a public commitment or position statement to conduct your engagement activities in line with the goals of the Paris Agreement?[…]No, but we plan to have one in the next two years