Total Responsible Ownership assets: £1254.70

Total assets under management: £1254.70

As at: 31/03/23

Contact: investorrelations@synconaltd.com

Overview

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Policy

Syncona is committed to:

• Integrating sustainability issues into our investment and management processes, with the right culture, values and expectations for sustainability set at the beginning of the investment process.
• Supporting each portfolio company to establish appropriate governance and monitoring processes for their sustainability performance, to ensure the most relevant sustainability issues are taken into consideration at each stage throughout a company’s lifecycle.

Syncona’s purpose is fully integrated with our investment approach. Fundamental to each investment is the potential impact of the technology to deliver a transformational impact for patients in an area of high unmet medical need.

Our core model is to create, build and scale companies based around transformational science. The result is that in many cases, we are involved in a company from the very outset. Even when we invest in an existing business, it will often only have a handful of employees. Accordingly, in practice we would not typically exclude a company from investment outright as a result of sustainability concerns; instead, we

would address any material issues upon investment and proactively look to shape the business as it grows.

Our responsible investment approach is focused on setting clear expectations for the following key issues for our portfolio companies:

• Access to medicine
• Animal welfare
• Good R&D practice
• Diversity and Inclusion
• Environmental impact
• High quality compliance and governance

At the company’s foundation, there are typically key academic founders working for the company, alongside a small number of employees. The companies may grow over a few years to 100 employees or more as their operations progress. It is therefore recognised that there should not be a “one size fits all” approach and that processes and initiatives should be proportionate, focused and not overly prescriptive.

However, at all stages we expect and encourage our portfolio companies to achieve our core standards.

When founding a Syncona company, we are focused on delivering transformational impacts for patients and delivering on our purpose to extend and enhance human life. By nature, our investment strategy means we primarily invest in technology that has the potential for a positive social impact. In our initial screen of investments, the investment team will consider whether there are any immediate issues, such as ethical considerations related to conducting trials in the proposed patient group or concerns in relation to founders or other parties involved in the investment. Where these concerns are raised, we may decide not to proceed or carry out further due diligence to see if they can be addressed.

For any new investment being considered, the final investment recommendation will include a section outlining the key beneficial impacts of the company in line with our purpose and any notable sustainability issues identified in the due diligence. These considerations will form a part of the investment decision and an investment may be precluded on this basis.

Syncona has a tobacco exclusion policy whereby Syncona will not make any direct investment in any tobacco company and will not knowingly make or continue to hold any investments in funds which would result in exposure to tobacco companies exceeding one per cent of the aggregate value of funds invested within Syncona’s capital pool.

For any new investment being considered, the final investment recommendation will include a section outlining the key beneficial impacts of the company in line with our purpose and any notable sustainability issues identified in the due diligence. These considerations will form a part of the investment decision and an investment may be precluded on this basis.

Our approach to responsible investment is focused on the key issues described above. We will work with our portfolio companies to support them in achieving our expectations in these areas, while maintaining a flexible approach that recognises the different stages of development and issues of these companies. Our activities split into two main areas.

• We ensure that our expectations and objectives are made clear to the teams at our portfolio companies at the outset. While each company is different and has flexibility to develop its own approach, we provide standard policies and other materials for the companies to consider where this is helpful. We can also provide support such as helping to make connections between portfolio companies or with our wider network where this would be useful to a company in addressing any questions.
• We encourage each company to put in place reporting frameworks to monitor progress on the key sustainability issues, and to provide that information to their board and Syncona. Asking them to put these frameworks in place helps to ensure that the board of each company gives proper consideration to these issues. The data in turn forms part of our own regular internal reporting and management processes.

These data in turn form part of our own regular internal reporting and are embedded into our processes for managing our investments. We also use the data to support reporting to the Syncona Board.

We hope that many of our companies will become thriving, independent businesses, and continue to grow in future, even after we are no longer shareholders. However, in some cases, there may be an opportunity to sell a company outright, most commonly to a larger pharmaceutical or biotech business who will want to acquire the products and pipeline that have been developed with a view to taking products to market. During any sale process, Syncona considers whether potential acquirers will continue to exercise appropriate stewardship and what steps it can take to address any concerns.

Following investment, Syncona continues to engage with each manager to understand how its approach to sustainability has been applied in practice, including any changes to its sustainability processes. This takes place through our routine monitoring of the manager, with a more focused sustainability appraisal at least once each year where the manager is expected to provide information to Syncona across a range of sustainability criteria. We also review any public reporting that the manager provides that is relevant to our investment.

Where we are not satisfied with how the manager is addressing sustainability issues in practice, we will engage with the manager on those issues, and may exit from the mandate or fund.

Process

Syncona’s purpose is fully integrated with our investment approach. Fundamental to each investment is the potential impact of the technology to deliver a transformational impact for patients in an area of high unmet medical need. Our core model is to create, build and scale companies based around transformational science.

Prior to all investments, the Syncona team undertakes a thorough diligence process which aims to build a view of value, cost and risk associated with each opportunity. For all new investments the Syncona team begins with thorough technical and commercial diligence in order to assess the opportunity. Following the initial diligence, the team estimates the value of the opportunity and the associated budget at a high level in order to proceed to term sheet negotiations. Once the term sheet has been agreed, the team works closely with experts to put together the business plan, before finalising the investment strategy and returns analysis for the investment proposal. Once a deal has closed, several months may be required for the company to be fully operational and all key personnel to be in place.  

Environmental, Social and Governance (ESG) issues are important to Syncona’s business and can be a significant driver of investment risk and investment value and thus form an integral part of our investment management process, including initial screening, due diligence, investment approval and ongoing portfolio company management. For any new investment being considered, the Investment Memorandum will include a section outlining the key beneficial impacts of the company in line with Syncona’s purpose and any notable ESG issues identified in the due diligence. These considerations will form a part of the investment decision and an investment may be precluded on this basis. Similarly, during any sale process, Syncona will consider whether potential acquirers will continue to exercise appropriate stewardship and what steps it can take to address any concerns.

Resources, Affiliations & Corporate Strategies

The Board has ultimate oversight and accountability at Syncona. The Syncona team implements the strategy on a day to day basis and engages with the portfolio companies on ESG. The Syncona team has an ESG committee which is led by the Head of IR and which is overseen by the CEO. The ESG committee is made up of three members of the investment team, the General Counsel, the Head of HR and a member of the finance team.  Syncona reports against the UN GRI and SDG frameworks, and became a signatory of the UN PRI in October 2021.

Literature

• Key Information Document
• Responsible Investment Policy
• Syncona Sustainability Policy
• Syncona website

Last amended: 12/10/23 10:17