Climate Change Data

Environmental Metrics

ESG Focus Areas

• Diversity, Equity, and Inclusion
• Climate Risk
• Cybersecurity
• ESG in Executive Compensation

Environmental Achievements

• Seven of fifteen portfolio companies lacking TCFD-aligned disclosure responded to a letter campaign, with two committing to developing TCFD-aligned reporting.

Social Achievements

• Tracked more than 55 instances where portfolio companies added diverse directors following Ariel engagement.
• Focused on portfolio engagement, policy engagement, collective action, and local impact to advance diversity, equity, and inclusion.

Governance Achievements

• Formalized ESG governance structures at both the investing and firm level.
• Increased transparency to stakeholders on key topics, including the disclosure of proxy voting rationales and portfolio-level ESG characteristics.

Climate Goals & Targets

Environmental Challenges

• Many portfolio companies are earlier in their ESG journeys or have room for improvement.

Mitigation Strategies

• Ariel seeks dialogue with management teams to encourage improvement on ESG disclosure and performance across relevant and material ESG issues. The firm focuses engagement resources on companies where efforts have a higher probability of success.

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• Exposure to extreme weather patterns affecting supply or production

Transition Risks

• Regulatory or land-use policies, energy costs, stranded assets

Reporting Standards

Frameworks Used: TCFD, SASB

Environmental Metrics

ESG Focus Areas

• Climate Change

Environmental Achievements

• Chicago headquarters located in a LEED Silver certified building
• New York City office located in a LEED Gold certified building

Governance Achievements

• Established Corporate Responsibility, Sustainability and Governance Committee to review climate-related risks and opportunities annually.
• Risk Committee and ESG Committee report to the board annually on strategies and activities.
• Material climate-related operational expenses reviewed annually during budgeting process.

Climate Goals & Targets

Environmental Challenges

• Potential issues arising from carbon pricing, increased regulation, and global supply chain disruption.
• Physical risks such as exposure to extreme weather patterns affecting supply or production and future revenue.
• Transition risks such as regulatory or land-use policies, energy costs, and stranded assets impacting business operations and continuity.

Mitigation Strategies

• Monitoring potential issues arising from carbon pricing, increased regulation, and global supply chain disruption.
• Seeking opportunities to achieve operational improvements specific to energy efficiency, water management, and firmwide emissions.
• Incorporating physical or transition climate risk and opportunity assessments into analysis and/or direct company engagement when relevant and material.

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• Increased severity of extreme weather events such as cyclones and floods

Transition Risks

• Regulation of existing products and services
• Exposure to litigation
• Shifts in consumer preferences
• Stigmatization of sector
• Increased stakeholder concern or negative stakeholder feedback
• Changing customer behavior
• Uncertainty in market signals

Opportunities

• Use of lower-emission sources of energy
• Participation in carbon market
• Development and/or expansion of low emission goods and services
• Reduced operational costs (e.g., through use of lowest cost abatement)
• Reduced exposure to future fossil fuel price increases
• Reduced exposure to GHG emissions and therefore less sensitivity to changes in cost of carbon

Reporting Standards

Frameworks Used: TCFD