Environmental, Social and Governance Report · 2018. 12. 7. · Google Greenhouse Gases Project. ... CMU is now developing predictive analytics which will predict the likelihood of

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Environmental, Social and

Governance Report

November 2018

Strictly Private and Confidential

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Note from the CEO

Setting the Tone for Our Portfolio Companies

SteelRiver is a Leader in Being Environmentally Responsible

SteelRiver Improves Life for the Communities in which it Operates

SteelRiver Supports Governance that Provides a Voice to All Stakeholders

Agenda

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Chris Kinney

Senior Managing Partner

SteelRiver

A Note from the CEO

SteelRiver recognizes its responsibility to act in the best long-term interests of its

investors. We believe that the long-term interests of our investors depend on the

long-term health of the communities in which our portfolio companies operate.

Consequently, we are committed to responsibly managing the environmental,

social and governance (“ESG”) issues in our investment decisions.

SteelRiver and the management and employees of each of our portfolio compa-

nies strive to excel in each aspect of their respective businesses. We are com-

mitted to the highest ethical standards and continuously measure our policies

and procedures against best practices. We are a leader in making our portfolio

companies environmentally responsible, improving life for the communities in

which our portfolio companies operate and supporting governance that provides

a voice to all stakeholders.

Below is more detail on the initiatives we have undertaken.

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Note from the CEO





Agenda

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SteelRiver undertakes numerous initiatives in order to ensure that a commit-

ment to ESG is a priority for each of our portfolio companies. We believe that

setting the tone through these initiatives at the fund level allows for the success-

ful implementation of ESG initiatives at our portfolio companies. This emphasis

on ESG begins at the very beginning of each investment through the inclusion

of ESG components in our investment approval documents.

We require ESG reporting from each of our portfolio companies that allow us to

monitor developments. These reports are a major point of discussion at every

board meeting and are updated on a quarterly basis. Discussing these reports

with our portfolio companies on a quarterly basis requires each management

team to consistently focus on ESG initiatives and allows us to frequently imple-

ment evolving best practices. These reports are also an important part of our

quarterly reports to our limited partners.

We believe that this focus on ESG at SteelRiver is manifested through the en-

couragement and enforcement of all of the ESG initiatives at our portfolio com-

panies described in this report.

Setting the Tone for

Our Portfolio Companies

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Agenda

Note from the CEO





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Peoples Natural Gas (“Peoples” or “PNG”) has as its primary mission the retail

delivery of methane, a potent greenhouse gas; however, Peoples intends to posi-

tion natural gas as a key change driver to fuel a more robust and cleaner econo-

my. Peoples’ service territories have a long history of producing and using natural

gas. Peoples has partnered with environmental organizations to educate the pub-

lic on the environmental issues associated with natural gas delivery and the im-

portance of reducing the region’s legacy methane emissions.

Peoples was the first utility to engage with the Environmental Defense Fund/

Google Greenhouse Gases Project. The Greenhouse Gases Project attempts to

locate and identify the sources of methane emissions in urban environments with

the goal of mitigating or eliminating the emissions once identified. Peoples sup-

ports that goal. Peoples’ unique leadership approach was recognized and ap-

plauded by the Pennsylvania’s Governor’s office, Pennsylvania’s Public Utility

Commission, the Office of the Mayor of Pittsburgh and many environmental

groups.

Fueling a Cleaner Economy

A Google street view car assists PNG and the Environmental Defense Fund in locating methane emissions in the Pittsburgh area and mitigating or re-

moving the source of the emissions

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Peoples has an ongoing partnership with Carnegie Mellon University (“CMU”).

CMU provides an independent quantification of the regional air quality benefits

arising from pipeline replacement projects. CMU’s quantification allows Peoples

to prioritize pipeline replacement projects in a manner that accelerates the bene-

fits to regional air quality. CMU is now developing predictive analytics which will

predict the likelihood of future leaks at any particular location. Such analytics will

help Peoples prioritize future capital expenditures.

Peoples is one of approximately fifty partners in the Environmental Protection

Agency’s STAR Methane Challenge. Partners commit to implementing technolo-

gies and practices to reduce emissions of methane. The Challenge also serves

a “clearinghouse” for the exchange of best practices in reducing emissions.

Partnering to Protect

the Environment’s Future

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Trans Bay Cable (“TBC”) increased the reliability of electric service into the City of

San Francisco (the “City”), transferred the then existing in-City generation to more

efficient facilities outside the City and allowed retirement of in-City generation sta-

tions that were required to maintain system reliability. The retirement of the in-City

generation and transfer to more efficient facilities reduces system-wide CO2 emis-

sions for each year that Trans Bay operates. The annual CO2 emission reductions

were estimated to be valued at $9.3 million for 2015 (the most recent year for

which a study was conducted).

Eliminating the Need

for in-City Generation

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TBC reconfigured its Pittsburg, CA control room and facilities to be more energy effi-

cient, provide better ergonomics for its staff and allow TBC to run reliably during peri-

ods of extreme heat. TBC also reconfigured its storm water drains and retention

pond in Pittsburg in accordance with environmental best practices to accommodate

the new construction at the Pittsburg site.

Improving Energy

Efficiency and Reliability

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Peoples has a program to mitigate “off system” emissions by collecting methane

emitted by landfills and coal seam beds. The collected methane is brought into

Peoples’ delivery system and ultimately delivered to a Peoples’ customer. Peo-

ples is currently collecting approximately 1.5 Bcf of natural gas annually from coal

seam producers and five landfills. Peoples is exploring another landfill that would

deliver additional 0.365 Bcf annually starting in 2019 and seeking other coal seam

production.

Peoples also has several programs that encourage replacement of coal, propane

or petroleum fueled facilities with natural gas powered equipment. Peoples is dis-

cussing displacement of coal with natural gas fired units with two electric utilities.

Peoples provides natural gas service to five electric generation plants that reduc-

es the requirements to use fuel oil for startup and flame stabilization. The reduced

emissions from the displaced fuel oil use at these plants are estimated to be

1,280 tons/year for NOx, 85 tons/year for SOx and 277 tons/year for COx.

Consistently Working

to Reduce Emissions

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Peoples also encourages the use of natural gas powered vehicles (“NGVs”).

NGVs emit lower levels of CO2 than conventionally powered vehicles. Approxi-

mately 6.5% of Peoples’ fleet vehicles are NGVs. Peoples serves 26 public/private

natural gas refueling stations and operates 10 private refueling stations. In 2016,

PENNDOT entered into an agreement to build 29 public/private NGV stations for

public transportation in Pennsylvania by 2021. Three of these PENNDOT stations

are currently operated by Peoples and an additional six of the planned PENNDOT

stations are within Peoples’ service territory. When the PENNDOT agreement is

complete, Peoples will serve 32 public/private refueling stations.

Supporting and Creating Alternatives to

Conventionally Powered Vehicles

PNG encourages the use of natural gas powered vehicles

PNG uses natural gas powered vehicles in its fleet

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Peoples is currently partnering with leading innovators and developers (such as

CMU and the University of Pittsburgh Energy Institute) to offer new products and

services that provide cheaper, cleaner and more reliable energy solutions to Peo-

ples’ customers. Peoples has partnered with natural gas producers, energy equip-

ment providers as well as energy plant operators in developing proposals for

“micro grids” for large customers (such as a college campus or hospital) where

combined heat and power (“CHP”), micro turbine and fuel cell technologies come

together to provide nearly all of the customer’s energy needs with reduced system

-wide CO2 emissions.

Developing Cheaper, Cleaner

and More Reliable Energy Solutions

A fuel cell demonstration unit showing that one day PNG customers

could satisfy their home’s electricity needs from natural gas

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In 2016, SteelRiver Transportation Ventures (“SRTV”) invested in Sierra Railroad

Company which included a subsidiary that is developing a waste-to-energy pro-

cess known as FastOx® gasification that should reduce the volumes of waste

destined for landfills. The FastOx® system uses heat, steam and oxygen to break

down waste at the molecular level and produces energy without burning of the

waste. Organic materials are converted to an energy dense synthetic gas fuel

while inorganics melt into a non-leaching stone. The waste is converted into high

value products with no toxic byproducts or emissions. The first commercial

FastOx® plant is located on a US Government facility and, upon completion of

testing, the subsidiary will begin broader commercialization.

Developing Waste Solutions

The FastOx installation at US Army Garrison Fort Hunter Liggett

in Monterey, California

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Peoples encourages customers to opt for “paperless billing” and has recognized

the opportunity to save 6,720 trees annually by converting all of its customers to

paperless billing. Peoples has already converted over 151,000 customers to pa-

perless billing, allowing the company to save an estimated 1,400 trees annually.

TBC emails encourage recipients to consider the environment before printing the

correspondence. SteelRiver has reduced paper consumption by providing its part-

nership meeting documents and presentations in electronic formats.

Reducing Waste by Going Paperless

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Agenda

Note from the CEO





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In order to position natural gas as a key change driver to fuel a more robust and

cleaner economy, Peoples is leading “Forge the Future”, a statewide effort to

develop an economic growth strategy based on the competitive advantages of

natural gas. This effort includes supporting legislative and regulatory changes to

encourage the development of local gas resources and transition of consumers

to natural gas on favorable economic terms. The regulatory changes include

now being able to socialize among a group of customers certain costs that, un-

der prior regulatory rules, were required to be paid up front by the customer ini-

tially requesting service. Following this change, Peoples is actively pursuing gas

service expansion initiatives where its network is expanded to serve customers

that previously did not have access to natural gas and had to rely on propane,

fuel oil or coal for heating. In addition to lowering customers’ heating cost, these

new customers enjoy the higher reliability of natural gas service. Peoples is also

partnering with large customers so the customer can develop its own micro-grid

where CHP, micro turbine and fuel cell technologies provide nearly all of the

customer’s energy needs at lower cost than the customer is currently paying.

Peoples is also partnering with a private foundation and local universities to de-

velop an urban farming initiative. Urban farming represents a large deployment

of CHP technology and aligns well with programs to provide sustainable job op-

portunities and food sources to low-income families and the unemployed.

Forging the Future

CHP unit powered by natural gas

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In 2016, TBC completed its “Quick Start” project, a major upgrade to its facilities

and control systems. The Quick Start project serves as an alternative to adding

significant, and likely expensive, generation capacity in the City. Prior to the instal-

lation of Quick Start at Trans Bay, the City could be without power for a number of

weeks if a major event impacted the Bay Area transmission grid. A loss of power

for this length of time would significantly impact hospitals, emergency response

capabilities and other critical operations in the City. A lengthy power outage in the

City would result in significant amount of economic damage, as well as potential

injury and loss of life. Quick Start allows Trans Bay to transmit up to 300 MW into

the City after a major event that otherwise creates a power blackout on the San

Francisco peninsula. This capability allows local electric utilities, the electrical

transmission grid operator and other stakeholders to expedite restoration of up to

300 MW of electric service to the City during an emergency blackout condition.

Providing Alternatives

to Additional Generation

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Peoples partnered with the City of Pittsburgh and the local water authority to

distribute nearly 30,000 water filters to families who have exposure to lead ser-

vice lines within the City. While not the permanent solution, it enabled these

families to drink the public water safely.

Peoples has recently announced a proposal to form a partnership with munici-

palities across Allegheny County to address water supply issues. In this pro-

posal Peoples has offered to bring safe drinking water to the region again by re-

moving all lead customer-owned service lines on an accelerated schedule and

building a state-of-the-art drinking water treatment facility powered by 100% re-

newable energy. Peoples has also proposed that the site of the current water

treatment facility be re-purposed to a site that includes affordable housing, pub-

lic parks, bike paths and green infrastructure.

Combining the company’s current gas pipeline replacement projects with water

line replacements and repairs will cut the region’s emissions from construction

vehicles and equipment in half.

Proposing a Partnership to

Provide Safe Drinking Water

Proposed water treatment facility to be

powered by 100% renewable energy

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This proposal would also create approximately 3,500 jobs for the local economy

during construction of the water treatment facility and the new water pipeline

system. Peoples has proposed to use Pittsburgh-based suppliers to purchase

construction materials, and to include all major local trade unions in the con-

struction activities.

Peoples has also promised that at least one of every three hires affiliated with

the proposal will be from a minority community. Partnerships will be formed with

minority small businesses on procurement and contractors will be required to

employ and train minority residents.

Proposing a Partnership to

Provide Safe Drinking Water continued

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TBC has participated in the California Public Utility Commission’s voluntary Utility

Supplier Diversity Program since 2011. This program is designed to increase the

utilization of businesses owned by persons traditionally underrepresented in the

public utility sector — Diverse Business Enterprises (“DBEs”). Trans Bay’s spend-

ing with such businesses increased 250% in 2016 over 2015 and 139% in 2017

over 2016.

Commitment to

Diverse Business Enterprises

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Peoples spearheaded a project to coordinate its system repairs and improve-

ments that require street closings with the similar repairs requiring street clos-

ings by municipalities and water and electric utilities in its service territory. Coor-

dination of street closings has reduced the time that streets are closed and com-

munity life is disrupted by more than half as compared to when the municipali-

ties and utilities did not coordinate.

Peoples has developed through its partnership with CMU a risk assessment

model to assist in prioritizing its pipeline replacements based on various risk

measures. This model uses several factors that allow Peoples to schedule re-

placements in a manner that maximize the improvement to public safety and en-

vironmental mitigation for a given pipeline replacement expenditure.

Coordinating and Partnering

to Improve Community Life

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Peoples and its employees are involved in many other initiatives to improve com-

munity life. Peoples executives serve on several regional boards including the

United Way, Pittsburgh Food Bank, Salvation Army, Goodwill Industries, Big

Brothers/Big Sisters, Leukemia Lymphoma Society, Leadership Pittsburgh, Pitts-

burgh Chamber of Commerce, Allegheny Conference on Community Develop-

ment, Pittsburgh Cultural Trust, Pittsburgh opera and many more important com-

munity organizations. For each of the last seven years, Peoples has chaired the

Pittsburgh Leukemia and Lymphoma Association “Light the Night” Walk. Peoples

is one of five civic partners chairing the Pittsburgh proposal for Amazon’s H2.

Peoples has also created a volunteer employee action committee that has located

or organized more than 50 events annually where employees volunteer in im-

portant community events.

Peoples seeks to have all members of its community have sufficient heat in win-

ter. Peoples has had a long term and continuing relationship with Dollar Energy, a

non-profit organization that seeks to heighten public awareness and support for

providing assistance to regional families needing help keeping homes warm in the

winter. Peoples also created an outreach program that sends volunteers door-to-

door to confirm that residents in the most needy and challenged neighborhoods

have heat in the winter.

The “Light the Night” walk in downtown Pittsburgh to benefit the Leukemia & Lymphoma Society

PNG employees

plant a tree in a city park

Supporting the Needs

of Local Communities

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SRTV employees have volunteered at eight local charitable events including “Stuff

the Bus” to provide school supplies to needy children, played games and made

arts and crafts with special needs children and adults at Pine Castle, sorting and

distributing nutritious foods for low income families as a part of the United Way’s

Day of Action and, in association with the Jacksonville Jaguars, the “Hometown

Huddle” to help with multiple community projects.


of Local Communities continued

SRTV supports “Stuff the Bus” to provide school supplies in local schools

SRTV employees volunteer to sort do-nated nutritious foods for needy fami-lies during the summer for the United

Way Day of Action

SRTV employee joins the Jacksonville Jaguars helping community project for

one day in their Hometown Huddle

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In 2017, TBC employees donated clothing, toys and household goods to support

victims of the Marin County wildfires. In addition, TBC employees have volun-

teered at a local food bank and packaged approximately 2,000 meals to families in

need.

TBC employees volunteer at the SF-Marin Food Bank


of Local Communities continued

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Each year, Peoples hosts collegiate-level students in various departments for a

12-week summer internship program. The intent of the program is to match stu-

dents to experiential opportunities at Peoples that will serve as mutually benefi-

cial for both intern and company. Interns are paired with an assigned mentor

whose goal is to provide insight and understanding, while encouraging the intern

to develop professional independence and industry knowledge. Mentors are able

to gain a fresh perspective from an outside source that may view processes dif-

ferently and may be able to identify improvements for increased efficiency. The

specified objectives and assignments given are expected to be valuable projects

that will challenge the interns and contribute to the overall functionality and suc-

cess of the company. Upon completion of the program, interns are expected to

present their take-away successes, value added and future plans to a group of

mentors and senior leadership to demonstrate the contributions that they have

made throughout the program. Students successful in his or her internship will be

considered as potential future talent to support Peoples’ workforce planning

needs.

In each of the last several years, TBC has sponsored internships for college stu-

dents that allow the students to work in each of TBC’s departments and be men-

tored by its professional staff.

In addition, SRTV sponsors four internships for local college students.

Providing Opportunities

for Students

SRTV employee escorts summer interns and HR Assistant at the

Port of Jacksonville

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Agenda

Note from the CEO





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Portfolio company boards generally include local business leaders or independ-

ent industry experts as independent directors. This allows a broader range of

views and consideration of wider stakeholder interests at the board level. Portfo-

lio company board meetings also generally include a discussion of the compa-

ny’s risk register, which each include an entire section of detailed ESG related

risk analysis.

Each portfolio company has a “Responsible Contractor Policy” modelled on

SteelRiver’s Responsible Contractor Policy. The policies require each portfolio

company to limit its major business relationships to third parties that only operate

in an ethical and socially responsible manner. Each portfolio company inquires of

its contractors about the requirements of the portfolio company’s policy from time

to time. The inquiries are generally on an annual basis for each of the major con-

tractors of the portfolio company.

Peoples has an internal audit department that reports directly to the Risk and Au-

dit Committee of its Board of Directors. The internal audit department generally

suggests areas and policies to audit but the Risk and Audit Committee can direct

the department to review any aspect of the Peoples organization.

Peoples won the 2014 Pittsburgh Business Ethics Award in the large company

category. Criteria for the award included: executive commitment to business eth-

ics; clear communication of ethical standards to employees; consistently high

quality of products and services; and commitment to community and charitable

involvement.

SteelRiver Supports Governance that

Provides a Voice to All Stakeholders

Peoples employee accepts the 2014 Pittsburgh Business Ethics Award in

the large company category

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For further information please contact:

Janice Ince

SteelRiver Services LLC

1 Harbor Drive, Suite 101

Sausalito, CA 94965

+1 415 291 2214

[email protected]

Kenneth Pereira

SteelRiver Services LLC

1 Harbor Drive, Suite 101

Sausalito, CA 94965

+1 415 291 2218

[email protected]

mailto:[email protected]

mailto:[email protected]

Documents

Environmental, Social and Governance Report · 2018. 12. 7. · Google Greenhouse Gases Project. ... CMU is now developing predictive analytics which will predict the likelihood of