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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
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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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
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
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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
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
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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.
Supporting the Needs
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
Supporting the Needs
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
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
28
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
Kenneth Pereira
SteelRiver Services LLC
1 Harbor Drive, Suite 101
Sausalito, CA 94965
+1 415 291 2218