ESG Policy

Seneca Partners Limited (“Seneca” or the “Company”) Environmental, Social and Governance (ESG) Statement 2023

The Board’s decision-making process incorporates, as part of the Company’s investment policy and investment objectives, considerations for supporting the Company’s business relationships with investors, third-party advisers, independent financial advisers, and the impact of the Company’s operations on the community and the environment, which by nature of the business, primarily extends to the holdings in portfolio companies and investment properties.

Environmental, Social and Governance (“ESG”) Practices

The Board recognises the importance of providing detailed information about environmental matters (including the impact of the Company’s business on the environment), employee and human rights, social and community issues, including information about any policies it has in relation to these matters and effectiveness of these policies.

The Company recognises that managing investments on behalf of clients involves considering a wide set of responsibilities in addition to seeking to maximise financial returns for investors. Industry practice in this area has been evolving rapidly and the Company seeks to be an active participant by working to define and strengthen its principles accordingly. This involves both integrating ESG considerations into the Company’s investment decision-making process as a matter of course and signing up to major external bodies who are leading influencers in the formation of industry best practice. The following is an outline of the kinds of ESG considerations that the Investment Manager is considering as part of its investment process.

Environmental 

Seneca, as part of its commercial due diligence practices and ongoing monitoring, examines potential issues which could arise from supply chains, climate change and environmental policy compliance. The Company looks for management teams who are aware of the issues and are proactive in responding to them. In-house, Seneca has taken a number of measures as a business to implement environmental policies, such as the introduction of a recycling program, running a paperless office and also installation of electronic vehicle chargers at the Company’s head office.

As a matter of policy, the Company seeks to reduce energy consumption using heat loss mitigation within its office, the installation of smart meters and encourages the reduction of its carbon footprint throughout the organisation. This includes taking part in a carbon offsetting project ran by Airfriendly Limited.

We also seek to encourage our customers and suppliers to look to reduce their impact on the environment where possible. For example, we encourage the use of paperless communication and digital signatures.

Social 

Seneca seeks to avoid unequivocal social negatives, such as profiting from forced labour within its investment portfolio and to support positive impacts which will more likely find support from customers and see rising demand. Seneca does not tolerate modern slavery or human trafficking within its business operations and takes a risk-based approach in respect of our portfolio companies. Investment managers actively engage with portfolio companies and their boards to discuss material risks, ranging from business and operational risks to environmental and social risks.

The Company is committed to engage with employees to provide a work environment which is challenging, dynamic, diverse and inclusive. We support the professional development of our colleagues and will seek to promote a good work life balance. During the year the Company will run a variety of social events aimed at improving the well-being of employees.

The Company also regularly holds charity fundraising events throughout the year and maintains close partnerships with both UK charitable organisations and overseas who are committed to local community initiatives and development programmes.

Ethical Governance

The Company’s board aims to set a good example for all employees in respect of demonstrating ethical governance. The focus is to promote transparency, strong oversight and appropriate risk management. This will help the Company achieve its goal of long-term preservation of value in the Company.

The Company’s in-house compliance team examine and maintain robust policies in relation to executive remuneration, conflicts of interest, equality and diversity, business leadership and culture. Further the compliance team ensure adherence to anti-money laundering, insider dealing, anti-bribery regulations and to Financial Conduct Authority Rules and Guidance.

In addition, the Company, as a matter of course, exercises its voting rights in portfolio companies whenever possible.

Key stakeholders

Employees

We understand that employees are a key factor in ensuring ESG compliance. The Company aims to empower all of its employees to act in a manner which is consistent with our ESG aims. Colleagues are encouraged to consider how their actions could have an impact on the wider world.

In respect of environmental concerns, employees are encouraged to consider changes that can be made both large and small. In respect of small differences, Seneca actively encourages ways to reduce the impact of travel. This would include encouraging use of public transport, car sharing and virtual options for meetings as appropriate. In respect of larger investments into the environment Seneca, as noted, has installed electric car charging points and looks to recycle waste where possible. Employees are encouraged to make use of such facilities.

In respect of social concerns, employees are empowered to challenge any discriminatory behaviour with clear procedures for reporting any concerns. All staff receive Equality & Diversity training each year.  Seneca takes all reasonable steps to look to promote Equality and Diversity in all aspects of the Company’s work. This includes human resources and recruitment policy.  

In respect of ethical governance, the Board of Seneca take an active role in further the goals of ESG Compliance. As noted, Seneca has an independent Compliance department which is responsible for monitoring the Company’s activities and employees are required to seek their guidance as required. Seneca has clear policies to seek to prevent unethical and illegal behaviour such as bribery and insider trading. Employees will alert senior management to poor behaviour and are guided by these policies should they have any doubts on expected standards.

Investors

The Company engages with investors directly through regular updates, interim and annual reports and through day-to-day correspondence to address any queries that arise.

The Company will seek to communicate with investors in the most appropriate method based on their investment. Where possible this will be via environmentally friendly methods. Seneca actively encourages investors to receive updates electronically and over the past year has engaged directly with investors to seek their permission to no longer send paper statements.

In respect of social concerns, the Company ensures that all investors are treated fairly and in a manner that they would expect. There are no barriers to invest or engage with the Company which would directly or indirectly relate to personal characteristics including but not limited to gender, race, faith, medical conditions or age.

In respect of governance the Company will carry out regular presentations or seminars to engage directly with stakeholders such as investors and/or their advisers. These are a fantastic opportunity to understand stakeholder positions and enable the Company to subsequently make changes to address any queries or concerns raised. This may include improving communications and understanding. Any queries or concerns which may arise, are discussed by the Board, factored into any decision-making, and disclosed in annual and interim reports where applicable.

Portfolio Companies

Prior to any investment, the Company carries out a full review of the proposed Portfolio Company. This will include consideration of any ESG concerns. Whilst not the only factor, a proposed Portfolio Company’s commitment (or lack thereof) may determine whether an investment is made.

In respect of environmental and social concerns, the Company seeks to avoid investments which have a negative impact on the environment or a cavalier approach to social issues. Conversely Seneca has invested in companies which have focussed on renewable energy and/or which aim to provide a positive contribution to society such as medical research.

Further in respect of social concerns, the Company has taken proactive steps of tackling inequality within the investment scene by signing up to the “Investing in Women Code”. This is a government initiative to improve female entrepreneurs’ access to finance, tools, resources they need to grow their businesses.

In respect of governance, the Company will monitor the Portfolio Companies. Whilst the Board has little direct contact with portfolio companies on a day-to-day basis, the investment managers provide updates which will be considered on at least a quarterly basis. Further in some Portfolio Companies, employees of the Company may hold board positions. Such positions whilst limited in scope, afford the Company additional visibility on the Portfolio Companies. It is noted that the Company holds minority investments in its portfolio companies and therefore cannot ordinarily force change. However, the Company will seek to raise any concerns through appropriate channels and by taking any appropriate action.

Conclusion

The Company understands that ESG is about achieving balance between many, sometimes conflicting interests. We have a duty to our colleagues, customers, suppliers and the wider world to act responsibly in all that we do. We aim to prioritise investing in colleagues alongside being a good corporate citizen and protecting the environment.

The Company views ESG as a continuous process of reviewing our operations and ensuring that they match with our values as a company. We value everyone and strive to work as one team.

Approved by the Board 21 March 2023.

Important notice

The products and services shown on this website place capital at risk. Investors may receive less in returns than they have invested. Investments may not allow for capital to be withdrawn on demand. If an investment provides tax relief then this relief is subject to change and is dependant on personal circumstances. Any reference to past performance or forecasted performance is not a reliable indicator of future performance.

Seneca Partners recommends that any investor seeks specialised financial and/or tax advice before investing. Seneca Partners does not provide advice and the information on this website, including but not limited to news, should not be construed as such.

Please confirm that you understand this warning and wish to proceed.

Risk summary

(Estimated reading time: 2 minutes)

Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.

What are the key risks?

  1. You could lose all the money you invest
    • If the business you invest in fails, you are likely to lose 100% of the money you invested. Most start-up businesses fail.
    • Advertised rates of return aren’t guaranteed. This is not a savings account. If the business doesn’t pay you back as agreed, you could earn less money than expected or nothing at all. In addition, if the tenant of the property being financed doesn’t pay the rent due as agreed or vacates the premises, you could earn less money than expected. A higher advertised rate of return means a higher risk of losing your money.
  2. You are unlikely to be protected if something goes wrong
    • Protection from the Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover poor investment performance. Try the FSCS investment protection checker at https://www.fscs.org.uk/check/investment-protection-checker/.
    • Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated firm, FOS may be able to consider it. Learn more about FOS protection at https://www.financial-ombudsman.org.uk/consumers.
  3. You won’t get your money back quickly
    • This type of business could face cash-flow problems that delay payments to investors. It could also fail altogether and be unable to repay any of the money owed to you.
    • Even if the business you invest in is successful, it may take several years to get your money back. You are unlikely to be able to sell your investment early.
    • Even if you are able to sell your investment early, you may have to pay exit fees or additional charges.
    • The most likely way to get your money back is if the business is bought by another business or is wound
      up following the sale of the underlying property. These events are not common.
    • If you are investing in a start-up business, you should not expect to get your money back through dividends. Start-up businesses rarely pay these. This investment aims to make quarterly repayments that comprise both a partial repayment of capital and interest, although this is not guaranteed. It could take over 14 years to receive back an amount equal to the amount you invested.
  4. This is a complex investment
    • This makes it difficult to predict how risky the investment is, but it will most likely be high.
    • You may wish to get financial advice before deciding to invest.
  5. Don’t put all your eggs in one basket
    • Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well.
    • A good rule of thumb is not to invest more than 10% of your money in high-risk investments. (See https://www.fca.org.uk/investsmart/5-questions-ask-you-invest).

If you are interested in learning more about how to protect yourself, visit the FCA’s website at www.fca.org.uk/investsmart

Application Form Request – Seneca IHT Service


Application Form Request – Seneca AIM EIS Fund


Application Form Request – Seneca EIS Portfolio Fund


Application Form Request – Seneca IHT Service


Application Form Request – Seneca AIM EIS Fund


Application Form Request – Seneca EIS Portfolio Fund


Risk summary

(Estimated reading time: 2 minutes)

Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.

What are the key risks?

  1. You could lose all the money you invest
    • If the business you invest in fails, you are likely to lose 100% of the money you invested.
    • Many of the loans ultimately financed by your investment are made to borrowers who can’t borrow money from traditional lenders such as banks. These borrowers have a higher risk of not paying back their loan.
    • Advertised rates of return aren’t guaranteed. If a borrower doesn’t pay back their loan as agreed, you could earn less money than expected. A higher advertised rate of return means a higher risk of losing your money.
  2. You are unlikely to be protected if something goes wrong
    • Protection from the Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover poor investment performance. Try the FSCS investment protection checker at https://www.fscs.org.uk/check/investment-protection-checker/.
    • Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated firm, FOS may be able to consider it. Learn more about FOS protection at https://www.financial-ombudsman.org.uk/consumers.
  3. You won’t get your money back quickly
    • Some of the loans financed by your investment will last for several years. You may need to wait for your money to be returned even if the borrower repays on time.
    • Some Managers may give you the opportunity to sell your investment early through a ‘secondary market’, but there is no guarantee you will be able to find someone willing to buy.
    • Even if your agreement is advertised as affording early access to your money, you will only get your money early if someone else wants to buy your shares or the company in which you are invested has sufficient available capital to buy them from you. If no one wants to buy, it could
      take longer to get your money back.
    • If you are investing for growth, you should not expect to get your money back through dividends as the Service is not designed to pay dividends to investors seeking growth. If you are investing for income, it will take at least 25 years to get your money back purely through dividends.
  4. Don’t put all your eggs in one basket
    • Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well.
    • A good rule of thumb is not to invest more than 10% of your money in high-risk investments. (See https://www.fca.org.uk/investsmart/5-questions-ask-you-invest).
  5. The value of your investment can be reduced
    • The percentage of the business that you own will decrease if the business issues more shares. This could mean that the value of your investment reduces, depending on the basis on which these new shares are issued.
    • If these new shares have additional rights that your shares don’t have, such as the right to receive a fixed dividend, this could further reduce your chances of getting a return on your investment.

If you are interested in learning more about how to protect yourself, visit the FCA’s website at www.fca.org.uk/investsmart

Risk summary

(Estimated reading time: 2 minutes)

Due to the potential for losses, the Financial Conduct Authority (“FCA”) considers this investment to be high risk.

What are the key risks?

  1. You could lose all the money you invest
    • If a business you invest in fails, you are likely to lose 100% of the money you invested in that business. Most start-up businesses fail. Please see page 14 of the Information Memorandum for an overview of the types of businesses this fund invests in.
  2. You are unlikely to be protected if something goes wrong
    • Protection from the Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover poor investment performance. Try the FSCS investment protection checker at https://www.fscs.org.uk/check/investment-protection-checker/.
    • Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated firm, FOS may be able to consider it. Learn more about FOS protection at https://www.financial-ombudsman.org.uk/consumers.
  3. You won’t get your money back quickly
    • Even if the business you invest in is successful, it may take several years to get your money back. You are unlikely to be able to sell your investment early.
    • The most likely way to get your money back is if the business is bought by another business or your shares are sold on the Alternative Investment Market. The latter can only occur if there is a willing buyer.
    • If you are investing in a start-up or EIS qualifying business, you should not expect to get your money back through dividends. Such businesses rarely pay these.
  4. Don’t put all your eggs in one basket
    • Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well.
    • A good rule of thumb is not to invest more than 10% of your money in high-risk investments. (See https://www.fca.org.uk/investsmart/5-questions-ask-you-invest).
  5. The value of your investment can be reduced
    • The percentage of the business that you own will decrease if the business issues more shares. This could mean that the value of your investment reduces, depending on how much the business grows. Most start-up businesses issue multiple rounds of shares.
    • These new shares could have additional rights that your shares don’t have, such as the right to receive a fixed dividend, which could further reduce your chances of getting a return on your investment.

If you are interested in learning more about how to protect yourself, visit the FCA’s website at www.fca.org.uk/investsmart

Risk summary

(Estimated reading time: 2 minutes)

Due to the potential for losses, the Financial Conduct Authority (“FCA”) considers this investment to be high risk.

What are the key risks?

  1. You could lose all the money you invest
    • If a business you invest in fails, you are likely to lose 100% of the money you invested in that business. Most start-up businesses fail. Please see page 14 of the Information Memorandum for an overview of the types of businesses this fund invests in.
  2. You are unlikely to be protected if something goes wrong
    • Protection from the Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover poor investment performance. Try the FSCS investment protection checker at https://www.fscs.org.uk/check/investment-protection-checker/.
    • Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated firm, FOS may be able to consider it. Learn more about FOS protection at https://www.financial-ombudsman.org.uk/consumers.
  3. You won’t get your money back quickly
    • Even if the business you invest in is successful, it may take several years to get your money back. You are unlikely to be able to sell your investment early.
    • For companies whose shares are not listed on any exchange (‘unquoted’ or ‘private’ companies), the most likely way to get your money back is if the business is bought by another business or lists its shares on an exchange such as the London Stock Exchange. These events are not common.
    • For companies whose shares are listed on an exchange (such as the AQSE or AIM), the most likely way to get your money back is if the business is bought by another business or your shares are sold on that exchange. The latter can only occur if there is a willing buyer.
    • If you are investing in a start-up or EIS qualifying business, you should not expect to get your money back through dividends. Such businesses rarely pay these.
  4. Don’t put all your eggs in one basket
    • Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well.
    • A good rule of thumb is not to invest more than 10% of your money in high-risk investments. (See https://www.fca.org.uk/investsmart/5-questions-ask-you-invest).
  5. The value of your investment can be reduced
    • The percentage of the business that you own will decrease if the business issues more shares. This could mean that the value of your investment reduces, depending on how much the business grows. Most start-up businesses issue multiple rounds of shares.
    • These new shares could have additional rights that your shares don’t have, such as the right to receive a fixed dividend, which could further reduce your chances of getting a return on your investment.

If you are interested in learning more about how to protect yourself, visit the FCA’s website at www.fca.org.uk/investsmart