Modern Slavery

1. Introduction

Hg is committed to carrying out business responsibly which includes ensuring that slavery and human trafficking are not taking place in any part of our business. In addition, as an investor, we recognise the importance of engaging with the companies in which our funds invest to encourage them to take steps to adopt responsible business and supplier processes.

This statement is intended to provide details of the steps we have taken as a business during the last financial year towards ensuring that slavery and human trafficking are not taking place in our organisation or in our supply chain.

2. Our organisation

Hg is a leading investor in software and services. With c.400 employees in five investment offices in the UK, Germany, France, the United States and additional offices in Luxembourg and Singapore. Hg has funds under management of >$70 billion , serving over 150 (as of 31 March 2024) highly regarded institutional investors, including private and public pension funds, insurance companies, endowments and foundations. Hg has been a signatory of the United Nations-supported Principles for Responsible Investment (UNPRI) since 2012 and is committed to their six principles seeking to include Environment, Social and Governance (ESG) into our policies and practices.

As a financial services business, our supply chain is relatively short and predominantly comprises professional services. As at August 2024, our funds have investments in over 50 companies. Some of these investment companies form part of our supply chain and we have identified that a number of them fall within the threshold of the requirements for reporting under the Modern Slavery Act in their own right.

3. Our policies

Hg’s Responsible Investment Policy explains our approach to ESG matters across our investment process. Hg’s investment strategy is to focus on software and services investments, and to follow our Responsible Investment approach, as such Hg funds do not invest in companies that:

have production or other activities that involve harmful or exploitative forms of forced labour or child labour; or

are involved in technologies which have a negative impact on human rights, such as those that restrict digital freedom, or inappropriately use artificial intelligence, automation and robotics, including dual use software applications or technology; or

are, in the opinion of Hg’s Investment Committee, exploitative of vulnerable groups in society.

In addition, we have a Sustainability Policy which covers our approach to sustainability at a firm level, including matters such as human rights.

Regarding our own supply chain, we are developing a Procurement & Supplier Management (P&SM) Policy which will outline certain requirements to be adhered to when onboarding and managing suppliers. This includes the requirement to perform relevant risk assessments and any accompanying due diligence as appropriate prior to signing a contract with a supplier, including relating to modern slavery and human trafficking.

The P&SM policy will be supported by underlying processes and internal guidance which will define the scenarios in which further risk assessments and accompanying due diligence must be carried out prior to signing a contract.

In addition, Hg has begun its launch of its Supplier Code of Conduct which sets out the minimum standards expected of all suppliers, across key topics including modern slavery, when providing goods or services to Hg. This aims to create consistent high standards of conduct across our entire supply chain. It acts as an important tool in helping us to obtain greater oversight over our suppliers and in meeting our own legal and regulatory obligations.

These new policies supplement our long-standing Guidelines for Business Conduct, which form part of our Employee Handbook. These Guidelines emphasise the need for us to act with integrity, in accordance with laws, and in a manner which strengthens the trust of our stakeholders and enhances our reputation. It also refers to our Whistleblowing Policy for staff to report any concerns.

4. Our approach to assessing and managing risk

To support Hg’s compliance with the Modern Slavery Act, we have also implemented a new supplier assessment process which comprises two stages of due diligence (see (5) below). This process identifies any supplier contract with a heightened risk of modern slavery based on the supplier’s offering and location and flags further action, such as due diligence, is appropriate.

We do not consider that our key relationships with professional or business services suppliers, such as our panel law firms and consultancy agreements, give rise to material risks in this area. We manage the risk through the use of suppliers whom we consider to be reputable, and we have specifically requested that all material regular suppliers in these areas confirm that their own business activities do not involve slavery or human trafficking.

For our own operations, we conduct a regular review of our high risk suppliers and assess whether any particular risks of slavery or human trafficking arise.

5. Our due diligence processes

The supplier assessment process described at (4) above acts as a first stage of due diligence. Should a contract be flagged as having an heightened modern slavery risk following this assessment, a second stage of due diligence is performed to ensure that our suppliers:

Are complying with the provisions of the Modern Slavery Act.

Review their supply chain in line with the Modern Slavery Act.

Pay their employees above the minimum wage.

Although not part of our supply chain, the investments made from the funds that we manage may potentially have greater impacts than our own business operations. Hg’s funds invest in software and services companies, predominately in the business-to-business space, that are headquartered in Northern Europe and North America.

These businesses are not manufacturing or supplying physical products and therefore do not have complex supply chains, nor rely on raw materials or products. The portfolio companies within our funds have similar supply chains to Hg, which are relatively short and predominantly comprise large established hardware suppliers, as well as professional services, in the development and support of software products. Before making any fund investment, we carry out extensive due diligence into the relevant business, which includes a formal assessment of ESG risks.

6. Our effectiveness in combating slavery and human trafficking

Previously, we have identified a small number of suppliers in potentially higher-risk areas, based on the products and/or services they supply to Hg. We have engaged with these suppliers and conducted additional due diligence on their compliance with the Modern Slavery Act. Now, we will continue to monitor these suppliers using the Supplier Code of Conduct, the P&SM Policy and its corresponding internal guidance.

For the companies that our funds invest in, we have taken the following steps:

Carried out due diligence at the time of investment to be satisfied that their business operational activities did not involve forced or child labour.

Raised awareness of the issues and the requirements of the Modern Slavery Act.

For those which are subject to the Modern Slavery Act, we have set out our expectations that they need to take steps to implement and enforce effective systems and controls to ensure they are both compliant with the Modern Slavery Act and that modern slavery is not taking place in their own business or their direct supply chains.

Furthermore, Hg’s investment process includes a comprehensive ESG assessment of our funds’ portfolio companies as part of onboarding and annually thereafter. Our most recent assessment in 2023 covered 210 ESG metrics, including human rights and modern slavery. The results of the annual assessment allows us to identify any gaps or areas for improvement amongst our portfolio. Hg sets out certain criteria to redress any such gaps, for example requiring that portfolio companies implement a code of conduct and a whistleblowing procedure.

This statement is made in accordance with section 54(1) of the Modern Slavery Act 2015 and constitutes Hg’s slavery and human trafficking statement for the financial year ending on the 31 March 2024. It has been approved by Hg’s Board and signed by Steven Batchelor on 8 October 2024.

Steven Batchelor
Hg Partner and Board member