Kingsmen Capital Partners – ESG Policy

1. Purpose, Commitment and Scope

Kingsmen Capital Partners (“Kingsmen”) is committed to embedding Environmental, Social and Governance (“ESG”) principles into all aspects of its credit origination, investment decision-making, portfolio monitoring and operational governance. As a private credit and structured lending institution, our fiduciary duty extends beyond capital deployment to the stewardship of long-term, sustainable value creation.

This ESG Policy applies to:

  • All Kingsmen investment vehicles and lending mandates

  • All credit origination, underwriting and approval processes

  • All portfolio monitoring and ongoing borrower engagement activities

  • All employees, officers, consultants and individuals involved in credit-related decision making

  • All counterparties, borrowers and partners interacting with Kingsmen funds

The policy ensures that ESG considerations are addressed systematically, consistently and proportionately across the entire investment lifecycle.

2. ESG Philosophy and Guiding Objectives

Kingsmen recognises that ESG factors directly influence credit quality, borrower resilience, collateral durability and the long-term risk profile of lending portfolios. Accordingly, our ESG philosophy is built upon the following key objectives:

2.1 Risk Mitigation

Identify and manage ESG-related risks that may impair borrower performance, collateral quality, security enforceability or long-term asset value.

2.2 Value Preservation

Promote lending structures that support sustainable cash flows, operational resilience and compliance across economic cycles.

2.3 Fiduciary Integrity

Ensure ESG considerations strengthen decision making and align with our responsibility to investors, trustees and regulatory authorities.

2.4 Transparency and Accountability

Maintain clear documentation, consistent reporting and rigorous governance around ESG processes and outcomes.

2.5 Continuous Enhancement

Adapt our ESG practices in response to regulatory developments, industry standards, market expectations and evolving risks.

3. ESG Integration Across the Investment Lifecycle

Kingsmen integrates ESG considerations through a structured, multi-phase process that aligns with global best practice.

3.1 Origination and Preliminary ESG Screening

During origination, all opportunities undergo an initial ESG screening process designed to identify:

  • Potential environmental hazards

  • Regulatory or compliance gaps

  • Reputational risks or borrower history

  • Sector-specific sensitivities (e.g., energy, waste, manufacturing)

  • Alignment with acceptable business conduct and ethical standards

Where risks are deemed severe, unmanageable or incompatible with Kingsmen’s risk appetite, the transaction may be declined without further review.

3.2 Detailed ESG Due Diligence and Underwriting

If an opportunity progresses beyond initial screening, ESG considerations form part of the comprehensive due-diligence process and credit assessment. This analysis is documented in the Investment Memorandum and is essential for Investment Committee decision-making.

Environmental Due Diligence Includes:

  • Environmental regulatory compliance

  • Status of environmental permits and approvals

  • Exposure to climate-related and geographic risks

  • Contamination, hazardous material handling or remediation concerns

  • Energy efficiency and resource utilisation metrics

  • Environmental liabilities that may impair collateral value

Social Due Diligence Includes:

  • Labour practices, health & safety standards and workplace culture

  • Impact on local communities and stakeholder groups

  • Supply chain integrity and modern slavery risk

  • Borrower adherence to ethical, inclusive and responsible practices

  • Project-level social risks (e.g., displacement, amenity impacts, community disruption)

Governance Due Diligence Includes:

  • Quality and experience of board, directors and key executives

  • Transparency of organisational and ownership structures

  • Internal controls, financial reporting and compliance capabilities

  • Borrower’s historical covenant compliance and responsiveness

  • Legal standing, outstanding claims or regulatory scrutiny

  • Integrity of decision-making, escalation and governance procedures

Each ESG factor is assessed for potential impact on cash flows, collateral, borrower stability and transaction structure.

4. ESG-Responsive Loan Structuring

Where material ESG risks are identified, Kingsmen may incorporate tailored provisions into the structure and documentation of the facility. These may include:

4.1 Covenant Architecture

  • Enhanced information reporting

  • Periodic ESG compliance certifications

  • Remediation milestones

  • Borrower obligations relating to regulatory filings or environmental protection

4.2 Pricing Adjustments

Interest margins may be calibrated to reflect ESG-derived credit risk.

4.3 Adjusted Leverage Parameters

  • Lower LVR thresholds

  • Higher cash-flow coverage requirements

  • Additional guarantees or security enhancements

4.4 Documentation Controls

  • Conditions precedent requiring specific ESG documentation

  • Events of Default triggered by significant ESG breaches

  • Mandatory remediation actions with specific timeframes

This ensures ESG risks are reflected in the legal and financial architecture of every facility.

5. Portfolio Monitoring, Reporting and Ongoing Oversight

Kingsmen maintains ongoing ESG oversight throughout the life of each loan. This includes:

5.1 Borrower Monitoring

  • Annual ESG review questionnaires

  • Periodic compliance confirmations

  • Independent environmental or operational audits where applicable

  • On-site inspections and asset reviews

5.2 Financial and Operational Surveillance

  • Covenant tracking

  • Monitoring of borrower cash-flows, DSCR, ICR and liquidity

  • Oversight of material operational incidents with ESG implications

5.3 Incident and Breach Management

Should material ESG deficiencies emerge, Kingsmen may:

  • Escalate issues to the Investment Committee

  • Require remedial undertakings from the borrower

  • Adjust loan terms or impose additional conditions

  • Reassess risk rating or impair the asset

  • Initiate enforcement actions if risk escalates materially

6. Role of the Investment Committee (IC)

The Investment Committee ensures ESG integration is consistently applied across:

  • Transaction approvals

  • Portfolio reviews

  • Risk assessments

  • Governance oversight

Responsibilities include:

  • Reviewing ESG findings within Investment Memoranda

  • Ensuring structures incorporate appropriate ESG mitigants

  • Evaluating any ESG-related incidents or impairments

  • Reviewing this policy and recommending enhancements

The IC serves as the ultimate authority for ESG-aligned credit decisions within its delegated limits.

7. Restricted and Excluded Activities

Kingsmen may refuse financing where ESG risks are materially incompatible with its risk appetite. Exclusions include, but are not limited to:

  • Illegal or environmentally destructive operations

  • Projects with unmanageable environmental liabilities

  • Activities involving child labour, human rights abuses or forced labour

  • Unethical business practices or corruption

  • Arms proliferation (subject to legal definition and context)

  • High-risk, unregulated waste or hazardous materials operations

  • Companies with severe, unresolved governance failures

Kingsmen may also apply additional exclusions based on fund mandates, trustee direction or regulatory requirements.

8. Regulatory Alignment and Standards

Kingsmen’s ESG Policy aligns with:

  • Corporations Act 2001 (Cth)

  • ASIC and APRA governance expectations

  • AFSL obligations (operational, compliance and record-keeping)

  • Global frameworks including:

    • TCFD (Task Force on Climate-related Financial Disclosures)

    • ISSB (International Sustainability Standards Board)

    • OECD Governance Principles

    • UN PRI (where relevant)

    • Modern Slavery Act 2018 (Cth)

The policy is reviewed periodically to ensure continued consistency with evolving regulatory expectations and global best practices.

9. Roles and Responsibilities

  • Board of Directors: Oversight, approval and accountability for ESG policy and governance.

  • Investment Committee: Ensures consistent integration of ESG across credit decisions.

  • Investment Team: Conducts ESG diligence, analysis and documentation.

  • Risk & Compliance: Ensures policy alignment, reporting accuracy and regulatory compliance.

  • Operations: Maintains ESG records, monitors reporting cycles and supports implementation.

10. Policy Review

This ESG Policy is reviewed annually, or earlier if:

  • Material regulatory changes occur

  • Fund mandates evolve

  • Risk profiles shift

  • Market standards advance

  • Governance or operational changes necessitate revision

All amendments require Board approval.