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    Turning Challenges into Opportunities How Apollo is making change happen in companies, communities, and the world 2019 ESG Annual Report


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    Table of Contents Recognizing the Value of ESG 01 A Message from Apollo’s Leaders 02 Apollo by the Numbers 03 Apollo Responds to COVID-19 06 Apollo’s ESG Program 08 Reporting Companies Overview 10 Corporate Governance and Transparency 12 Sustainable Consumption and Production 22 Climate Action 32 Respect for Workers 42 Responsible Citizenship 52 Appendix A: Reporting Companies 64 Appendix B: Reporting Real Assets 65 Appendix C: Defined Terms 66 Appendix D: List of Figures 67 Appendix E: Responsible Investing and Environmental, Social, and Governance Policy 69 Appendix F: UN Sustainable Development Goals Content Index 72 Appendix G: GRI Content Index 74 Appendix H: Legal Disclaimer 78


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    2019 ESG ANNUAL REPORT Recognizing the Value of ESG Since our founding in 1990, Apollo has been known for our consistent and rigorous approach to finding value. Taking many paths to value across private equity, credit, and real assets has made us one of the largest alternative investment managers. Woven into the fabric of our value- oriented business and our culture is Apollo’s commitment to recognize and realize the full value of environmental, social, and governance (ESG) factors. Apollo believes that actively managing ESG risks and seizing ESG opportunities makes us better investors, and better stewards of our investors’ money, by positioning Apollo and portfolio companies for sustainable success. Just as important, we believe that Apollo can and should have a positive impact on society, helping to make the world a better place and improving people’s lives. Read Apollo’s full Responsible Investing and ESG Policy on page 69. 1


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    Reporting Companies’ Achievements in ESG $ 974,060, 430+ ESG reports submitted by reporting companies to Apollo 24B+ pounds of 26,000+ waste recycled by reporting ESG data points submitted by reporting companies companies 100+ 1,066,000 company site visits by Apollo’s ESG team Data as of January 1, 2008, through December 31, 2019, unless otherwise indicated. 1


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    ,629 donated by reporting companies to charitable causes 40 Apollo’s Biennial Portfolio Company Conference 198 97 84 52 49 ESG 44 45 39 24 25 webinars 2011 2013 2015 2017 2019 Number of Companies Represented Number of Attendees 00+ 125+ hours volunteered by companies have reporting company participated in Apollo’s employees ESG reporting program 2


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    2019 ESG ANNUAL REPORT A Message from Apollo’s Leaders We are proud to publish Apollo’s 2019 ESG Annual Report. This marks our 11th year of reporting, and is the first time we have made the entirety of our report publicly available. While the focus of this report is on calendar year 2019, we cannot ignore the events of the first half of 2020, a year that we began with great optimism, only to be confronted by immense challenges: hundreds of millions of lives upended by a global pandemic and hundreds of thousands lost; still other lives ended by violence rooted in racial injustice. Just six months in, the events of 2020 have illustrated all too clearly the impact that environmental, social, and governance issues have in shaping our world. To address challenges of this magnitude, we believe the firm must not just be open to change, but must also seize the opportunity to make positive change happen. As this report describes, Apollo has helped employees, companies, communities, and frontline workers cope with the pandemic while also recognizing the need to do more to help our firm and our industry welcome a more diverse set of talents. The strong relationships we have forged with our employees, partners, investors, and portfolio company management teams made this possible. Apollo’s success is built on the value we create for society. We help pension funds, which represent more than one-third of our investors, to meet their commitments to public servants and private employees; we help insurance companies to keep their promises to policyholders; and we provide financing that enables borrowers to grow and create jobs. Moreover, as this report shows, we also provide dozens of companies with an industry-leading program to help them actively address ESG issues. As we enter our second decade of ESG reporting, Apollo has strengthened our policies and infrastructure to continue to make ESG a priority. We have the vision to see that financial returns alone are not enough, and recognize that we achieve better results when we keep ESG considerations in mind. Recycling reduces environmental waste, and can add value to a company’s bottom line. Employee training creates safer working environments, increases productivity, and can help reduce costly employee turnover. This report documents many examples of how Apollo helps companies face challenges and capture opportunities. In 2020, Apollo adopted a comprehensive Responsible Investing and ESG Policy, with specific policies for each asset class. We also built upon our existing governance infrastructure: firm-wide decisions on ESG issues are now made at the most senior level, led by a steering committee chaired by our Global Head of ESG that includes certain members of our Executive and Management Committees. This committee draws on recommendations from Apollo’s cross- functional Green Teams from our Credit, Private Equity, and Real Assets businesses. As we celebrate our 30th year as a firm, we believe Apollo has the policies and talent in place to view our investments more clearly than ever through an ESG lens, which better positions us to identify opportunities to create value for our investors and our stakeholders alike. Scott Kleinman Jim Zelter Laurie Medley Co-President, Co-President, Global Head of ESG, Lead Partner, Private Equity Chief Investment Officer, Credit General Counsel, Private Equity 2


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    2019 ESG ANNUAL REPORT Apollo by the Numbers 1 FIGURE 1 316B AUM by Asset Class $ Real Assets: $38 Billion Credit: assets under management $210 Billion Private Equity: $68 Billion 18 global offices FIGURE 2 Employees by Geography2 1,400+ North America: 1,042 Asia-Pacific: 167 Europe: 212 employees including 400+ investment professionals Our Investors FIGURE 3 FIGURE 4 Investors by Type Investors by Geography Fund of Funds/Consultant Australia: 2% Endowment/Foundation: 2% Latin America: 1% Middle East Corporate Pension 7% 9% 8% 27% Public Pension Asia 10% HNW/Retail 9% 61% North America Europe 16% Others 11% 18% Sovereign/ Governmental 17% Finance/Insurance Company 1. As of March 31, 2020. 2. As of December 31, 2019. 3


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    2019 ESG ANNUAL REPORT Apollo by the Numbers 1 (continued) Our Citizenship 903 hours volunteered by Apollo employees Spotlight: Expanding Citizenship Efforts Across Our Platform • To keep increasing Apollo’s engagement, philanthropy, $1,322,000 and positive impact on our communities, the firm formalized and expanded a variety of citizenship initiatives across our platform. donated to nonprofit organizations • We formed a senior leaders’ Citizenship Steering Committee, chaired by our new Global Head of Citizenship, to collaborate with our employee-led Citizenship Advisory Council. • Acting on Citizenship groups’ discussions and the results of employee surveys, we are building a portfolio of opportunities $600M for Apollo employees to develop their leadership skills as well as making a positive impact on our firm’s culture and communities. • Our new Citizenship Grant Program, announced in 2020, matches employees’ charitable contributions or makes In connection with Apollo’s donations to match their volunteer hours, up to $2,500 conversion to a corporation in per employee per year. August 2019, our Founder, Chairman, and Chief Executive Officer Leon Black, and Co-Founders and Senior Helping Veterans Managing Directors Josh Harris and Marc Rowan, along with several other Apollo senior executives, announced their intention to set aside a portion of their equity stakes toward charitable giving. Apollo Operating 55,591 emails received by vets to engage on career interests Group units worth approximately $600 million based on recent trading Apollo launched the Apollo Veterans Talent Network at apollovetnet.com, a website designed to help vets at every level find the right job for their talents prices are expected to be exchanged and acquired skill sets. Built in conjunction with CareerBuilder, a company for an equal amount of Class A owned by Apollo-managed funds, this site is unique in the finance industry. It is the culmination of a commitment we made years ago to ease veterans’ shares, which the executives intend transition from service to civilian life. Apollo-managed funds invest in many to donate to charity over time. companies that are committed to hiring veterans, National Guard, Reserve, and military spouses and partners. Here veterans can search opportunities using codes that identify specific jobs in the military — such as MOS, AFSC, or NEC codes — and instantly find entries that match their experience. 1. As of December 31, 2019, unless otherwise indicated. 4


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    2019 ESG ANNUAL REPORT Our Environmental Footprint FIGURE 5 Energy Consumption and GHG Emissions Apollo Global Financials Sector Median1 Total Energy Consumed (MWh) 7,397 127,538 Total Energy Consumption Intensity (MWh/employee) 5.21 6.00 Scope 1 GHG Emissions (MT CO2e) 170 4,740 Scope 2 GHG Emissions (MT CO2e) 2,616 24,614 Scope 3 GHG Emissions (MT CO2e) 2,333 2 14,425 Total GHG Emissions (MT CO2e) 5,119 28,768 3 Scopes 1 and 2 GHG Emissions Intensity (MT CO2e/employee) 1.96 2.00 1. The Conference Board/Bloomberg (2019). 2. Apollo Scope 3 GHG emissions includes emissions from business air travel only. 3 Includes Scope 1 and Scope 2 GHG emissions only. Workforce Safety and Turnover FIGURE 6 Safety and Turnover Rates Total Incident Rate 1.0 Voluntary Turnover Rate 9.0 Our Governance FIGURE 7 Workforce Policies and Trainings Policy Training Anti-Discrimination Anti-Harassment Code of Conduct Cybersecurity Data Privacy Equal Opportunity 3,000+ hours of compliance and Health & Safety cybersecurity trainings by Apollo employees Whistleblower 5


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    2019 ESG ANNUAL REPORT Apollo Responds to COVID -19 The unprecedented COVID-19 pandemic called for extraordinary action, and Apollo and reporting companies stepped up to meet the challenge. This global public health crisis has reshaped all aspects of daily life — and prompted remarkable acts of courage and generosity in support of our communities and those on the front lines. Apollo employees, our leaders, and dozens of companies addressed a variety of needs with total contributions amounting to more than $50 million. Supporting frontline healthcare workers • The Debra and Leon Black Family and Aramark, in drive-by testing events, leading public education in partnership with the American Red Cross, Robin initiatives, deploying telehealth services, and providing Hood, and the Mayor’s Fund to Advance New York childcare for frontline staff. City, launched the NYC Healthcare Heroes program • Talos and Express Energy have tapped their supply to provide shelf-stable food, household supplies, chains to release and donate much-needed personal and health products to staff at hospitals across protective equipment. the five boroughs through June. The Black Family committed up to $20 million toward the high-impact • Athene, Shutterfly, and Amissima secured, funded, initiative, and Apollo and its senior partners also and donated items such as masks, ventilators, and made significant contributions. hospital supplies. • Apollo and the Harris Family Charitable Foundation • Diamond Resorts provided complimentary rooms for purchased 200,000 KN95 respirator masks to distribute more than 10,000 nights for healthcare professionals to New York City hospital systems, including the hard-hit and first responders. Elmhurst Hospital in Queens. • Rackspace offered significant free OpenStack • LifePoint Health is preparing for surges in community Public Cloud hosting resources for COVID-19 relief need by setting up a temporary hospital, participating organizations. 6


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    2019 ESG ANNUAL REPORT Supporting communities Supporting education • CareerBuilder launched a Crisis Support Center to help • University of Phoenix presented free, credit-bearing affected Americans find jobs. online courses and tool kits for K–12 teachers adapting to online learning environments; it launched the Alliance • ClubCorp partnered with the Red Cross and other for Virtual Learning, helping teachers create a blueprint regional blood organizations to host more than 80 blood for the future of virtual education. drives for club members across 16 states. The company also connected with more than 20 state and local • McGraw Hill offered free access to online higher-ed government officials to offer facilities for large-scale coursework and training to help professors and students community response needs. transition to digital learning platforms, and provided free K–12 digital products and access to the ALEKS learning • The Fresh Market provided 5 million meals for local platform. food banks, and The Fresh Market and Smart & Final are offering early shopping hours for those at higher risk. • Intrado partnered with Cisco to provide free virtual learning software, online classroom platforms, and school messaging tools for K–12 schools in the US. 7


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    2019 ESG ANNUAL REPORT Apollo’s ESG Program As one of the world’s largest alternative investment managers, Apollo believes that consideration of ESG issues is essential to companies’ success, by enhancing their ability to manage risks and by identifying areas for cost savings and for growth. Apollo’s ESG Program rests on three pillars: thorough ESG diligence, meaningful and tailored engagement with companies post-acquisition, and a commitment to transparency and periodic reporting of qualitative and quantitative ESG information. We believe the processes underlying these three pillars better position company management teams and our investment professionals to improve performance on ESG issues. 1 2 3 DILIGENCE ENGAGEMENT TRANSPARENCY Apollo’s proactive approach to Once a transaction has closed, our approach We believe that being integrating ESG issues begins to engagement across ESG issues focuses transparent about the ESG with identifying ESG risks and on improving a company’s long-term performance of reporting ensuring they are appropriately sustainability and increasing benefits for all companies is an integral addressed and documented stakeholders. Specific engagement topics and essential element of a throughout our diligence and are often tailored to a particular company’s comprehensive ESG program, pre-investment decision- circumstances, based on the findings of and we provide periodic making. Our investment our pre-investment diligence process. We reports to both limited partners professionals, together with also engage companies on topics that apply and the public. We encourage third-party advisors, apply their across industries and geographies, such companies to adopt this expertise and an industry- as ensuring governance structures are approach through compliance specific approach to potential implemented that provide appropriate with applicable ESG regulatory ESG risks. They assess levels of oversight, and internal processes regimes, and by voluntarily potentially material risks and for collecting and monitoring key ESG disclosing ESG data and identify ways to minimize or performance indicators. More generally, information on their historical eliminate them, at the same Apollo acts as a resource for company performance and future goals. time seeking out potential management teams on all ESG matters and ESG-related opportunities to provides programming to share best engage with management practices alongside operational assistance teams post-acquisition. on environmental, health, safety, workforce, and governance issues. 8


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    2019 ESG ANNUAL REPORT Spotlight: Portfolio Company Conference In September 2019, Apollo hosted our fifth Portfolio Company Conference in Las Vegas, NV, continuing our tradition of bringing together portfolio company representatives. Nearly 200 participants attended, including more than 60 expert speakers and representatives from nearly 50 portfolio companies. In addition to providing attendees with an opportunity to meet their peers, share best practices, and participate in team-building events, the conference also offered three separate educational tracks focused on Sustainability, Human Capital, and Legal topics such as public ESG reporting, workforce talent retention and mental health, and data privacy and cybersecurity regulations. + 190 4 49 16 session topics team- building offsite events conference attendees 60+ expert speakers companies represented 9


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    2019 ESG ANNUAL REPORT Reporting Companies Overview FIGURE 8 FIGURE 9 FIGURE 10 Reporting Companies Reporting Companies Reporting Companies by Sector by Revenue by Region Healthcare Materials Latin America Information Technology Asia-Pacific Consumer Staples Communication Services Less Than $1 Billion to Consumer Discretionary $250 Million $4.9 Billion Europe Industrials North America $5 Billion+ Financials Energy $250 Million to $999 Million 58 companies in the Apollo ESG Reporting Program North America Europe Rest of World NUMBER OF COMPANIES NUMBER OF COMPANIES NUMBER OF COMPANIES 44 11 3 TOTAL REVENUE TOTAL REVENUE TOTAL REVENUE $61.2B+ $8.9B+ $5.2B+ TOTAL EMPLOYEES TOTAL EMPLOYEES TOTAL EMPLOYEES 219,000+ 29,000+ 42,000+ TOTAL SITES TOTAL SITES TOTAL SITES 3,500+ 780+ 350+ As of December 31, 2019. Total revenue based on each reporting company’s headquarters location. 10


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    2019 ESG ANNUAL REPORT Robust Engagement with Apollo’s ESG Reporting Program FIGURE 11 Reporting Companies’ Response Rates for Select ESG KPIs Environmental Total Sites Total Global Site Area Energy Consumption Energy Cost Weight of Waste to Landfill 1 Cost of Waste to Landfill 1 Weight of Waste Recycled 2 Water Withdrawn 3 Water Cost 4 Scope 1 GHG Emissions Scope 2 GHG Emissions Total Number of Vehicles Fuel Consumption 5 Fuel Cost 5 Social Total Employees % of Employees That Are Part-Time Voluntary Turnover Rate Total Number of Direct Reports to CEO Total Incident Rate 4 Lost-Time Incident Rate 4 Anti-Discrimination Policy Anti-Harassment Policy Equal Opportunity Policy Health and Safety Policy Human Rights/Trafficking Policy Social Media Policy Supplier Code of Conduct In-Person Supplier Inspections Company Charitable Employee Volunteer Hours State and Local Taxes Paid Governance Number of Board Meetings Board Meeting Attendance Antitrust Policy Anti-Corruption Policy Code of Conduct Emergency Response Plan Sustainability Policy Whistleblower Policy Data Privacy Policy Cybersecurity Policy 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1. Excludes Financials sector companies. 2. Excludes Financials sector and upstream oil and gas companies. 3. Excludes Communication Services, Financials, and Information Technology sectors companies. 4. Includes custom safety metrics. 5. Excludes companies with fleets of fewer than 10 vehicles. 11


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    2019 ESG ANNUAL REPORT Corporate Governance and Transparency Intangibles such as corporate culture and governance represent an increasing share of corporate value. Apollo pays close attention to the governance practices of reporting companies, from oversight of ESG issues to compliance and risk management. 12


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    2019 ESG ANNUAL REPORT The Challenge Corporate Governance Data Overview How to encourage publicly FIGURE 12 available ESG reporting? Average Director Attendance at Reporting Companies’ Board Meetings The Opportunity Provide companies with the tools and expertise to + get started Apollo’s ESG Program, founded in 2008, illustrates the firm’s 94% 400 board meetings held by conviction that careful attention reporting companies in 2019 to ESG factors is not only the right thing to do, but also makes good business sense. Apollo is focused on expanding public ESG reporting, starting FIGURE 13 with the companies owned Reporting Companies’ Median and Average Number by Apollo-managed funds. of Board Meetings and Attendance by Sector Public reporting of ESG data has become widespread, with Number of Percent of Directors Board Meetings in Attendance 86% of S&P 500 companies Median Average Median Average publishing sustainability All Sectors 5.0 7.6 98% 94% reports — a fourfold increase Communication Services 8.0 9.7 98% 90% since 2011, according to the Consumer Discretionary 4.0 5.6 100% 98% Governance & Accountability Energy 4.5 6.6 100% 92% Institute. Apollo has taken the initiative, encouraging Financials 8.5 15.3 89% 87% companies to use the data Industrials 4.0 4.3 100% 96% they compile for Apollo’s ESG Reporting Program to develop their own ESG reports. At FIGURE 14 our 2019 Portfolio Company Diversity, EHS, and Sustainability Functions at Reporting Companies Conference, Apollo brought in expert advisors from Business for Social Responsibility to Dedicated Employee(s) help companies identify fundamental ESG reporting Employee(s) Responsible in principles and the key audiences Addition to Other Duties for public ESG reports, and Formal Corporate Function provide companies with a comprehensive report template Informal Working Group to help them get started. 0% 10% 20% 30% 40% 50% Percent of Reporting Companies Diversity EHS Sustainability 13


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    2019 ESG ANNUAL REPORT Policies, Trainings, and ESG Oversight & Disclosure Reporting Company Policies FIGURE 15 Reporting Companies’ Disclosure of Company Policies 100% Percent of Reporting Companies 80% 60% 40% 20% 0% 2015 2016 2017 2018 2019 Antitrust Anti-Corruption Code of Conduct/Business Ethics Emergency Response Plan Whistleblower Policy FIGURE 16 Number of Reporting Companies That Reviewed Company Policies 35 32 31 30 30 29 28 28 28 27 26 26 26 26 24 23 23 22 21 21 19 19 18 18 10 10 10 9 9 9 9 9 ion n nt th t/ y cy k ity ity ty ts ia r r st lan we he rit oo tio s E uc fe gh ed me ru iva n bil pt cu Ot ics eP db tu ina Sa blo es nd tit Ri lM ina ru ss Pr rse or an An sin Co ns rim n tle or h& ra ta pp cia sta ma eH be po C Ha his Bu e of Da sc lO ti- alt So Cy Su Hu es ye ti- Di W An ua He d yR G/ plo An ti- Co Eq ES An nc Em ge er Em Policy Type 2018 2019 14


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    2019 ESG ANNUAL REPORT Reporting Company Trainings FIGURE 17 FIGURE 18 Percent of Reporting Companies That Trained Percent of Reporting Companies with Cybersecurity Employees on Company Policies and Data Privacy Policies and Trainings 100% Antitrust Percent of Reporting Companies 80% Anti-Corruption Code of Conduct/ 60% Business Ethics Emergency 40% Response Plan 20% Whistleblower 0% 20% 40% 60% 80% 0% Policy Training Policy Training Percent of Reporting Companies Cybersecurity Data Privacy In Development In Place ESG Oversight & Disclosure FIGURE 19 Level of Oversight of ESG Issues at Reporting Companies Other 21% 24% Board of Directors 46% of reporting companies have formal ESG targets in place or in development (Sub)committee 3% of Board 10% Committee of One or More 41% Individual Executives Executives 79 % of reporting companies exercise oversight of ESG issues at the board or executive levels 15


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    2019 ESG ANNUAL REPORT ESG matters at Diamond Resorts are overseen by and subcontractor management, enforcing emergency the company’s board of directors, who received oral preparedness through regular drills and audits, and or written reports on at least one ESG topic at every helping employees to better understand the emergency board meeting held in 2019. Diamond’s global corporate response procedures. Talos reduced its total recordable Green Teams implement and establish environmental incident rate (TRIR) and lost-time incident rate (LTIR) by standards and initiatives, and set measurable targets 54% and 55%, respectively, in 2019, which the company for the company’s sustainability performance at its attributes to the successful implementation of the North American and European resorts. For example, HSE Plan. The Talos Operations Compliance Group, the company has set a goal of diverting 25% of its total established in 2017, performs annual compliance audits waste from landfills by 2025, and of reducing overall on all Talos offshore facilities and provides field personnel energy consumption by 21.5% through upgraded with regulatory education and training. In 2019, the LED lighting, renewable energy options, and targeted group oversaw more than 26 safety device tests at each energy analysis. Toward these goals, from 2018–2019 of the company’s major facilities, more than double the Diamond succeeded in decreasing its Scope 2 GHG requirement of one device test per month. In addition, emissions by 3.4%. In Europe, Diamond’s Green Team Talos recently established a Crisis Management Team established goals that helped the company reduce its comprised of senior company representatives tasked European resorts’ energy consumption and cost by with responding to emergency situations other than 2.9% and 0.6%, respectively, in 2019. Diamond’s Green spill response. Talos in 2019 also updated the company’s Teams also established sustainability partnerships Code of Conduct and Business Ethics, adding a new with environmental organizations such as Audubon human rights provision to vendor selection. International, a nonprofit that helps businesses identify and set the highest standards of sustainability. Since partnering with Audubon International, 30 Diamond FIGURE 20 resorts have been Audubon Green Lodging certified, and Reporting Companies’ Disclosure of in 2019, Diamond was recognized as a leader with 183 Anti-Corruption Policy vs. Sector Benchmarks awards from sustainability and hospitality organizations. Maxim Crane’s focus on workforce safety and overall ESG matters begins with the company’s board of directors. Communication Services Maxim operates an anonymous hotline, with instructions Consumer prominently displayed in all branches, for employees to Discretionary report any issues directly to the Audit Committee. Each monthly performance review and each quarterly board Energy meeting begins with a thorough look at the company’s safety statistics and safety procedures. The company’s Financials ESG Committee meets regularly and Safety Committee Industrials meetings are held quarterly, with their findings promptly reported to the board and addressed during monthly 0% 20% 40% 60% 80% 100% board calls. In recent years, the company witnessed an Percent of Companies increased exposure of motor vehicle accident rates in its truck fleet — a trend identified in part through quarterly Sector Disclosure Rate1 Reporting Companies Safety Committee meetings at the branch level and 1. TCB/Bloomberg (2019). monthly Executive Safety Review calls. As a result, Maxim Crane purchased dash and backup cameras for the fleet, leading to a significant decrease in accident rates. The Watches of Switzerland Group is committed Talos developed a comprehensive Health, Safety, to high standards of corporate governance. It took Environment & Sustainability Strategic Plan (HSE Plan) in several steps toward realizing its transparency goals in 2019. The HSE Plan takes an active top-down approach 2019, publishing its first Corporate Governance Report, to workplace safety and emergency preparedness. distributed as part of its publicly available 2019 Annual It also emphasizes key ESG performance indicators, Report and Accounts. This governance report provides such as improving risk assessments of work activities, detailed insights into the board’s organizational structure eliminating serious incidents through active contractor and the identities and roles of each board member, 16


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    2019 ESG ANNUAL REPORT Food certification. To ensure effective store operations, FIGURE 21 Sbarro conducts thorough quarterly store audits that Reporting Companies’ Disclosure of Code are assessed by senior management. The company’s of Conduct vs. Sector Benchmarks management also strives to measure and continuously improve customer satisfaction, and to that end, Sbarro recently partnered with HS Brands to collect customer Communication feedback via a survey link at the bottom of all receipts. Services Consumer Oversight of environmental, health, and safety (EHS) Discretionary matters at Resource Energy is exercised by the Energy company’s dedicated EHS Officer. This role includes supervising the safety orientation of all new field Financials employees, leading monthly safety meetings on topics pertinent to field personnel, and supervising all EHS- Industrials related contractor activity and new-location permitting. The EHS Officer performs monthly site inspections, 0% 20% 40% 60% 80% 100% which are documented to satisfy regulatory reporting Percent of Companies requirements for air quality and greenhouse gas (GHG) Sector Disclosure Rate1 Reporting Companies emissions. The officer communicates these findings to the Area Superintendent and provides specific 1. TCB/Bloomberg (2019). recommendations to remediate or mitigate potential areas of concern, making sure that any proposed actions are adequately performed and documented. The EHS Officer maintains and regularly distributes updated site records, and describes current projects and accomplishments responds to field incidents to ensure proper reporting, and of the board’s committees. For example, a committee coordinates testing of all emergency and safety equipment. comprised of a majority of independent, non-executive directors developed a new Remuneration policy, which Compliance risk and ESG-related issues are managed by was put to a vote by the Group’s shareholders in October. the Lapithus Compliance and HR teams. Lapithus has The company also updated its anti-corruption and a Code of Ethics that applies to all employees across the whistleblowing policies, in connection with its listing group, with policies on antitrust, anti-corruption, code of on the London Stock Exchange. It has maintained its conduct and business ethics, anti-money laundering, and status as an accredited member of the Responsible data privacy. All employees receive training in the Code of Jewellery Council, an international nonprofit dedicated to Ethics every year. Lapithus’ HR program includes policies advancing responsible business practices from mine to on equal opportunity in the hiring process; discrimination; retail in the diamond and jewelry metals supply chains. sexual harassment; and health and safety. These policies The Watches of Switzerland Group also has its own code are revised frequently to ensure they stay aligned with of conduct to ensure that suppliers adhere to ethical current legal, regulatory, and business needs. trading practices. Vendors provide the company with full access to their production facilities, and failure to correct For oversight of EHS issues, Apex Energy takes a any violations of the company’s code of conduct results multidisciplinary, cross-functional approach. In December in termination of the business relationship. of each year, the company’s board of directors reviews and approves EHS goals for the upcoming calendar In 2019, Sbarro revised 10 company policies and year; in March, management reports to the board on the offered employees training on topics that included company’s performance against the prior year’s metrics, anti-discrimination, equal opportunity, health and safety, identifying areas for further improvement. In addition and social media. Sbarro identifies and manages food to board oversight, all ESG matters are overseen at the safety–related risks by adhering to Hazard Analysis executive level by the company’s CEO and general Critical Control Points (HACCP) and requires all suppliers counsel. At the strategic level, Apex management to provide HACCP plans and references. In addition ensures that each project has a dedicated employee to HACCP requirements, Sbarro mandates that all responsible for EHS matters. For example, in an earth- prospective vendors provide a third-party food safety moving project, the company’s EHS Director oversees audit of their facilities and demonstrate their commitment the development of site plans, conducts pre–work site to food safety and quality by attaining Safe Quality walks with contractors, and supervises ongoing work to 17


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    2019 ESG ANNUAL REPORT ensure compliance with sedimentation control, habitat a corporate function responsible for EHS that has set protection, and site safety. Apex’s cross-functional EHS environmental performance targets and goals aimed at working group meets weekly to review the status of each increasing the company’s efficient use of materials and project throughout the project’s life, and reports on its energy. VAC has established online training programs on current status, future performance expectations, and IT and security matters, and throughout 2019 evaluated lessons for future improvement. new IT-related training software, which the company expects to implement in 2020. BPP, a Vanta Education subsidiary, has a robust Environmental Management System (EMS) through As a public company listed on the New York Stock which climate-related risks and opportunities are Exchange, Athene adheres to the highest levels of monitored and managed biannually. Through the EMS corporate governance and transparency, and the Management Review, risks are ranked based on their company’s 15-person board of directors is majority probability of occurrence and financial impact, and independent. In October 2019, Athene announced a BPP develops business continuity plans based on strategic transaction with Apollo that closed in February the results for each facility. Each year, the company 2020. The transaction eliminated Athene’s multi-class also completes desktop scenario exercises to assess share structure and further increased the alignment identified climate-related risks that inform environmental between Athene and Apollo. Because Apollo and its needs and targets. For example, BPP has set GHG affiliates have a significant voting interest in Athene, emissions reduction targets and goals and voluntarily Athene maintains a Conflicts Committee designated by benchmarks its GHG emissions through the Carbon its board of directors, consisting of directors who are Disclosure Project. In 2019, BPP’s CDP Climate Change not affiliated with Apollo, which reviews and approves Score rose from a C to a B. In addition to climate- material transactions between Athene and Apollo, related initiatives, in 2019 Vanta Education established a subject to certain exceptions. company-wide Anti-Slavery and Human Trafficking Policy. Board oversight of ESG issues is a key component In 2019, VAC revised several core company policies, of Ventia’s governance. Ventia’s board of directors including those related to antitrust, business conduct, approved the company’s Sustainability Policy in 2019, cybersecurity, and data privacy. This process also led with ESG issues reported at every board meeting to the adoption of a new whistleblower policy, which held during the year. In 2019, Ventia also published its established a whistleblower hotline to ensure confidential Sustainability Framework, which is aligned with the UN disclosures of potential misconduct. In addition, VAC has SDGs and outlines clear objectives in four areas: Climate, People, Partnerships, and Governance. Ventia is in the process of voluntarily adopting the Australian Securities FIGURE 22 Exchange (ASX) Corporate Governance Council’s Corporate Governance Principles and Recommendations Reporting Companies’ Disclosure of Whistleblower Policy vs. Sector Benchmarks with respect to climate-related risk assessments, and is working to establish a Sustainability Council to drive its agenda across the organization. Working groups focusing on gender and First Peoples have been in Communication Services place for some time, creating positive outcomes for Consumer women and local communities. The broader agenda Discretionary outlined in the new Sustainability Framework has resulted in a revision of these working groups with an expansion Energy to include streams on health, waste, emissions, and modern slavery. Financials McGraw Hill places a premium on sustainable and Industrials ethical business conduct, particularly when it comes to 0% 20% 40% 60% 80% 100% selecting suppliers. As part of the company’s RFP process, potential suppliers are vetted on their diversity status, and Percent of Companies supplier contracts require compliance with the company’s Sector Disclosure Rate1 Reporting Companies Supplier Code of Business Ethics and its anti-corruption 1. TCB/Bloomberg (2019). standards. McGraw Hill has a minority supplier diversity program and is an active member of the National Minority 18


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    2019 ESG ANNUAL REPORT Supplier Development Council and the NY/NJ Minority from news organizations, authors, and a Pulitzer Prize– Purchasing Council. Between Q1 and Q3 of 2019, McGraw winning journalist. Initiatives such as these have earned Hill contracted approximately $20 million with minority McGraw Hill recognition on Business Insider’s list of “2019 suppliers. Within the company, McGraw Hill’s Inclusion Most Attractive US Employers” and Forbes Magazine’s and Diversity commitment is led by dedicated HR senior “America’s Best Midsize Employers.” In 2019, Seguradoras Unidas updated its Code of Conduct with clear examples, simplified language, and new graphic designs that better illustrate behavior 74% of reporting companies made according to the company’s principles. A separate Code of Conduct for suppliers outlines benchmarks that suppliers must meet regarding human rights, corruption, and climate-related risks. Seguradoras public ESG disclosures in 2019 also collaborates with third parties to continuously identify, evaluate, mitigate, and monitor material risks. These initiatives, showcased in the company’s publicly leaders, along with a cross-functional I&D Leadership available sustainability report, have helped Seguradoras Team that focuses on cultivating an inclusive atmosphere, earn widespread consumer trust. In 2019, for the and attracting and retaining diverse talent. In 2019, the fifth consecutive year, it was awarded the “Choice of I&D Leadership Team hosted the second iteration of its Professionals” distinction, which recognizes the high global webcast speaker series. The series, which was degree of satisfaction achieved by the company among made available to all employees, included speakers insurance brokers and agents. ESG Opportunities in Real Assets 52% of property managers reported having a corporate sustainability function In 2019, nearly half of the third-party property operators who manage real assets owned by Apollo- managed funds reviewed and updated their corporate governance policies. For many property operators, workforce safety is critical and is managed by top-down governance that provides clear and consistent safety guidelines. In addition to reviewing its cybersecurity policy, Eclipse Senior Living updated the Health, Safety, and Security section of its Associate Handbook, and revised its Emergency Response Plan to promote standardization across assets and ease of use by field operators. The Cincinnati Office Portfolio’s corporate governing body includes a committee dedicated to safety, which assists in developing an OSHA-compliant safety training curriculum each year. Northview Hotel Platform, which uses customer input to guide its decision-making, focuses on developing and redeveloping its assets through the eyes of the target guest. The property manager comprehensively analyzes customer feedback, such as focus groups, charrettes, and web surveys, to ensure all its policies and improvements align with guest expectations. Hyatt Houston keeps customers informed on major sustainability and governance initiatives by publishing a public corporate sustainability scorecard on its website each year, highlighting improvements over previous years and setting new environmental goals based on benchmark data. Sustainable and professional management practices like these have earned properties owned by Apollo- managed funds widespread recognition: Viseen Industrial Park properties earned a “Poverty Alleviation” award for strategic planning and pioneering in supporting local communities, and a Steelbridge Office Platforms property was a finalist for the South Florida Business Journal’s “Project of the Year” Award. 19


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    2019 ESG ANNUAL REPORT Select Corporate Governance and Transparency Data Average Number Number Code of Conduct/ Attendance Public ESG ESG Goals Data Emergency Company of Board of Board Meetings Anti-Corruption Business Cybersecurity Whistleblower at Board Disclosure and/or Targets Privacy Response Plan Meetings with ESG Updates Ethics Meetings Consumer Discretionary Company A 10 96% — — — Company B 4 100% 0 Company C 4 100% 4 Company D 9 96% — — Company E 5 100% 0 Company F 8 97% >1 Company G 4 100% 0 Company H 4 100% 0 Company I 4 89% >1 Company J 6 98% 0 — Company K 12 100% 0 Company L 5 90% 1 Company M 4 100% 4 Company N 4 95% 0 Company O 8 96% >1 Company P 4 100% 4 Company Q 4 100% 1 Company R 1 100% >1 Consumer Staples and Healthcare Company A 12 92% >1 Company B 6 94% 0 Company C 7 100% >1 Energy Company A 3 100% 1 Company B 9 90% >1 Company C 5 80% 0 Company D 15 100% 15 Company E 4 100% 4 Company F 4 100% 1 Company G 4 100% — — — Company H 12 — — — — Company I 4 100% 4 Company J 4 100% 4 Company K 9 100% >1 Company L 6 100% >1 Key No Policy or Training in Place Policy in Place Training in Place Policy and Training in Place — Company Did Not Report 20


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    2019 ESG ANNUAL REPORT Select Corporate Governance and Transparency Data Average Number Number Code of Conduct/ Attendance Public ESG ESG Goals Data Emergency Company of Board of Board Meetings Anti-Corruption Business Cybersecurity Whistleblower at Board Disclosure and/or Targets Privacy Response Plan Meetings with ESG Updates Ethics Meetings Financials Company A 6 85% 0 Company B 8 92% >1 Company C 9 89% >1 Company D 7 88% >1 Company E 42 96% 1 Company F 5 93% 0 Company G 9 74% 9 Company H 33 91% 1 Company I 49 89% 1 Company J 5 70% >1 Company K 13 98% — Industrials and Materials Company A 4 78% 4 — Company B 3 90% 1 Company C 4 95% 1 Company D 4 100% >1 Company E 4 92% 4 Company F 4 100% 0 Company G 4 100% 0 Company H 4 100% 4 Company I 6 100% 6 Information Technology and Communication Services Company A 4 88% 1 Company B 17 73% 0 Company C 4 100% >1 Company D 9 70% 1 Company E 8 98% 1 Key No Policy or Training in Place Policy in Place Training in Place Policy and Training in Place — Company Did Not Report 21


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    2019 ESG ANNUAL REPORT Sustainable Consumption and Production Companies are transforming how they produce and what they consume: making more efficient use of resources, capital, and technology to reduce economic, environmental, and social risks. Sustainability has taken its place as a strategic business imperative. 22


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    2019 ESG ANNUAL REPORT The Challenge Sustainable Consumption and Production Data Overview How to assess the growing variety of third-party 2,400+ 145,500+ sustainability certifications? The Opportunity inspections of suppliers conducted MT of waste recycled by Create a framework by reporting companies reporting companies to help companies assess the value of certifications FIGURE 23 Reporting Companies’ Waste Recycling by Sector Apollo is helping companies to understand the growing number of third-party sustainability 250,000 certifications and labels available Weight of Waste Recycled (MT) 200,000 to businesses, buildings, products, and services. The 150,000 firm developed a framework to enable companies to assess 100,000 the relevance and utility of sustainability certifications in 50,000 this increasingly fragmented space. This framework was 0 2015 2016 2017 2018 2019 developed with the assistance of expert advisors and launched in Communication Services and Information Technology Consumer Discretionary a dedicated session at our 2019 Consumer Staples and Healthcare Energy Industrials and Materials Portfolio Company Conference. Among other things, the framework identifies key criteria for companies to consider, including the clarity, rigor, transparency, independence, FIGURE 24 and veracity of the third Reporting Companies’ Recycling by Waste Type parties offering sustainability certifications, and is flexible enough to apply equally to both generic and industry- and 100% product-specific certifications. Percent of Reporting Companies 80% 60% 40% 20% 0% Aluminum Cardboard e-Waste Glass Organic/Compost Paper Plastic 2018 2019 23


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    2019 ESG ANNUAL REPORT Supply Chain, Waste Generation and Recycling, and Water Withdrawal and Recycling Supply Chain FIGURE 25 Reporting Companies’ Evaluation of Suppliers’ Sustainability Practices 25% Percent of Reporting Companies 20% 62% 15% 10% 5% of reporting companies 0% conducted in-person Climate-Related Risks Sustainability Performance inspections of suppliers Processes for Evaluating New Suppliers Processes for Monitoring Existing Suppliers Waste Generation and Recycling FIGURE 28 Reporting Companies with Waste Recycling and Reduction Initiatives None 9% + 858,000 34% Waste Recycling Only Waste Recycling 57% and Reduction MT of waste generated by reporting companies 24


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    2019 ESG ANNUAL REPORT Water Withdrawal and Recycling FIGURE 26 FIGURE 27 Percent of Reporting Companies with Reporting Companies’ Disclosure Water Reduction and Recycling Initiatives1 of Water Withdrawn1 100% Water Reduction None 30% 32% Percent of Reporting Companies Initiatives 80% 60% 6% 40% Water Recycling Initiatives 32% 20% Both 0% 1. Excludes reporting companies whose operations do not require the use of water. 2015 2016 2017 2018 2019 1. Excludes Communication Services, Financials, and Information + Technology sector companies. 22B gallons of water withdrawn by reporting companies FIGURE 29 FIGURE 30 Reporting Companies’ Disclosure of Reporting Companies’ Weight of Waste Recycled Waste Recycled vs. Sector Benchmarks and Revenue Generated from Recycled Waste 250,000 $14 Consumer Discretionary $12 200,000 Energy $10 Metric Tons (MT) Millions of USD 150,000 $8 Financials $6 100,000 Industrials $4 50,000 Telecommunication $2 Services 0 $0 0% 20% 40% 60% 80% 100% 2015 2016 2017 2018 2019 Percent of Reporting Companies Waste Recycled Revenue Generated Sector Disclosure Rate1 Reporting Companies 1. TCB/Bloomberg (2019). 25


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    2019 ESG ANNUAL REPORT In 2019, Diamond Resorts reduced its overall waste to produced by the company. This results in clean, low- landfill by 66% compared to 2018, leading to $102,000 cost energy to power most of the company’s offshore in savings. At several of Diamond’s European resorts, platforms and its Helix Producer 1 floating production the company installed water filters and switched to vessel. Any water product, such as drilling waste, biodegradable products to avoid single-use plastics, domestic wastewater, or desalination water, is processed reducing plastic bottle usage by 7% and saving to EPA standards and tested for toxicity before being approximately 531 kg of plastic waste. From 2017 to 2019, recycled back into the ocean. Almost every process at consumption of single-use plastic at Diamond resorts Talos is backed by a digital workflow that is processed, fell by 20%, saving some four tons of plastic. Many resort stored, or transferred by virtual servers; this allows the locations have also begun working with local waste company to efficiently utilize any extra capacity by management companies to move toward single-stream loading multiple servers onto a single piece of hardware. recycling. In addition to waste reduction, Diamond By leveraging this technology, Talos reduces the recently introduced a series of water reduction initiatives electricity required to power the machines and cool the that have reduced water usage by 10.2% compared data centers, as well as the amount of e-waste created to 2018. The implementation of a new housekeeping when these devices are discarded at the end of their cleaning system in all European resorts has saved the useful life. Overall, Talos’ use of virtualization technology company approximately eight liters of water per day per has reduced total energy consumption of the company’s apartment, and reduced the use of cleaning products by servers by 80%. 30%. At the global level, Diamond has begun updating its facilities with low-flow toilets and shower heads, and each location has developed plans to reach baseline FIGURE 31 environmental targets based on its unique geographic Reporting Companies’ Disclosure of conditions. For instance, landscaping with local native Water Withdrawn vs. Sector Benchmarks plants to reduce water consumption, and employing drip irrigation, provides a simple water-saving alternative to traditional sprinkler systems. Consumer At Direct ChassisLink (DCLI), sustainable materials Discretionary management is intrinsic to the business. The company has committed to the US Environmental Protection Agency’s WasteWise program, the nation’s first Energy voluntary program for solid waste prevention and reduction. This commitment is realized through DCLI’s extensive steel and rubber recycling initiatives, and by Industrials continuously upgrading its chassis fleet with longer- lasting components and technology. The company 0% 20% 40% 60% 80% 100% has recapped and reused tires for the last decade, and Percent of Reporting Companies since 2018 has upgraded company policy to eliminate the purchase of new tires. All tires, including refurbished Sector Disclosure Rate1 Reporting Companies units, are fitted with retreads; new tires are purchased 1. TCB/Bloomberg (2019). only when necessary. In 2019, DCLI recycled nearly 20.5 million pounds of tires and steel, avoiding costs of approximately $5.4 million. DCLI also engages in robust chassis refurbishment efforts, the result of a In addition to participating in a landlord-sponsored decision by management to decrease fleet costs and program to recycle paper, plastic, cardboard, glass, and reduce negative environmental impact. In 2019, the aluminum, EP Energy resells and recycles the majority company refurbished and returned to service 2,768 of its e-waste. In 2019, the company sold or recycled 34 chassis, extending their useful life, decreasing waste, mobile phones, 111 laptop computers, and 50 desktop and avoiding the cost of purchasing new chassis. computers. In February 2019, the company launched a “Fit Company Paperless Challenge,” through which Talos employs a wide range of sustainability practices to the company’s leaders encouraged employees to “go reduce the company’s environmental footprint. All Talos generators are self-sustaining and fueled by natural gas 26


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    2019 ESG ANNUAL REPORT paperless” and awarded prizes to office floors that achieved the highest reduction. As a result of this initiative, EP Energy used approximately 80% less paper each month than it did in 2018. Water conservation is another area in which EP Energy made serious inroads in 2019: the company successfully negotiated with landowners in 33% of reporting companies have initiatives the Eagle Ford region to recycle water for the first time, to address supplier sustainability resulting in the reuse of approximately 11,844,000 gallons of water for hydraulic fracturing purposes and paving the way for future sustainability initiatives. In 2019, Freestone Midstream started its first water Mood Media introduced a variety of energy recycling initiative, which led to the recycling and reuse consumption and waste reduction initiatives in 2019. of more than 2.3 million gallons of produced water. To The company eliminated excess office space by offset freshwater drainage, recycled water is reused by transitioning employees to work from home, and oil and gas companies in subsequent new development substantially reduced energy consumption by adjusting drilling. These initiatives significantly reduce the stress on the operation of HVAC systems at its locations in Spain local water supplies and increase the net water available and in Austin, TX, on weekends, when the facilities to areas where Freestone operates. Freestone is also are not in use. At its corporate headquarters, Mood conscious of its electricity usage and is working with continued to transition to 100% biodegradable plates a local power company in Wyoming to introduce new and utensils in lieu of plastic, paper, and Styrofoam. energy efficiency initiatives, including variable-frequency All Mood offices in Belgium and the Netherlands have drives on high-horsepower pumps. These initiatives eliminated the use of plastic cups, and in Spain the office are currently being implemented in all new Freestone has reduced its consumption of plastic cups by 90%. In facilities within the power company’s service area. 2019, the company exclusively provided several offices with plates and paper towels made from 100% reclaimed In 2019, AGS continued its initiatives to reduce energy resources, and Mood continues to recycle e-waste and raw material consumption at its facilities and generated at its European and San Diego, CA, offices. in its products. These initiatives included an LED lighting project at the company’s Oklahoma City, OK, For ClubCorp, the nation’s largest owner and operator manufacturing center, expected to result in savings of of golf courses, water use and conservation is one of the 31,868 kWh per year. To reduce unnecessary waste, AGS most important sustainability issues. For example, Crow has adopted recycling and reuse programs at all its major Canyon Country Club in Danville, CA, has converted facilities, and the company promotes a philosophy of from city water to effluent water supply for irrigating the using refurbished components in its products whenever course. This conversion not only reduces water costs possible. More than 50% of outgoing AGS products for the club, but also eliminates withdrawal of water are built with refurbished components, including bill from the aquifer and allows the club to reuse water validators, printers, and process control boards. In that would otherwise have been discharged by the city. recent years, AGS has redesigned its products to replace The Las Colinas Country Club in Dallas, TX, recently fluorescent lighting with LED bulbs, reducing energy replaced an antiquated hydraulic irrigation system with consumption, and has redesigned product packaging to a new electric irrigation system, which is expected to eliminate the need for bubble- and shrink-wrap, reducing reduce annual water use by 15% and to provide the club waste and improving shipping efficiency. with better control over the watering cycle. ClubCorp also has engaged an irrigation design firm to review TEGRA is constantly seeking to implement new waste irrigation systems at clubs located in areas of high water recycling programs and to expand its water reduction risk, including California, Arizona, and Nevada, and the initiatives. Cardboard and paper are recycled at all company recently revised its Golf Course Maintenance company facilities, glass is recycled at its US facilities, Manual to require that all clubs use moisture meters plastic is recycled at all facilities in the US and Honduras, to help determine daily watering requirements. Over and 100% of lightbulbs are recycled to ensure the the past three years, 90% of the company’s clubs have safe disposal of mercury. In 2019, TEGRA expanded its upgraded their irrigation control system software to corporate initiative to optimize and reduce the use of increase overall productivity and efficiency. cardboard, replacing regular packaging materials with less-corrugated material, saving 77,740 kg of paper — the 27


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    2019 ESG ANNUAL REPORT equivalent of about 340 trees. In Nicaragua, TEGRA discontinued, and those falling below satisfactory receive donated 4,195 yards of fabric and trim material to Mission a follow-up evaluation in six months; if still unsatisfactory, 14, a local charity that provides job training and placement that relationship is discontinued. Internally, IGT manages to local residents. TEGRA also continued to reduce its its quality of services through several mechanisms, overall water consumption in 2019 by investing in new including monthly training for employees and regular technologies. As part of the company’s Move to Zero quality evaluations based on statistical samples. Using initiative, TEGRA piloted a reverse-osmosis water system these internal procedures, the company establishes at its El Salvador location that cut monthly water use for action plans, conducts regular risk audits, and submits screen printing services by 98% — from 60 m3 per month the findings to senior leaders monthly to maintain in 2018 to 0.83 m3 per month in 2019. In all its locations, accountability and ensure corrective actions. TEGRA has implemented an efficient water treatment process that filters all processed water and returns it to Nova KBM decreased its paper consumption by local water systems cleaner than it was received. approximately 17 tons in 2019 compared to 2018, preserving more than 400 trees, and cutting its cost of paper and printing by 35%. Nova KBM attributes this to new initiatives introduced in 2019 specifically to reduce paper consumption and cost. For example, in September 31 reporting companies require the 2019, the company installed digital signature pads in all branches — a significant step toward greener, paperless operations. By going paperless, Nova KBM digitized over 400,000 signed documents and electronically stored use of water in their operations over 3 million documents in 2019 alone. The company also continued its “Click for the Environment” initiative, with some 5,000 clients in 2019 opting to receive e-notifications and account statements, saving nearly The Fresh Market donated more than 2.6 million pounds one ton of paper. of cedonsumable discard and 11 pallets of unused food Sustainability is central to the primary business to Feeding America’s local food bank partners in 2019. operations of Phoenix Services, which processes The company also launched a new software program to steel mill by-products and scrap metal into inputs that help limit overproduction of perishable foods, such as can be recycled back into the steel-making process. bakery goods, prepared meals, and fresh-cut produce. The company helps to generate sustainable product Through joint efforts of the company’s IT, Finance, streams for the by-products, reducing the need for Merchandising, and Operations departments, the new virgin raw materials and cutting the steel mills’ energy program was customized using store-specific data based consumption, the carbon footprint per ton of steel. To on a two-year history of product movement, and it is minimize wastewater, Phoenix Services uses catch basins periodically updated to account for new products and or water retention ponds at all facilities and recycles sales trends. Since the tool’s rollout in November 2019, water from processing plants back into operations for The Fresh Market has shown a 0.5% improvement versus reuse. To reduce the amount of new commercial water the prior year, or $281,000 saved, on these perishable used in its operations, the company also works with items. The company believes this will save approximately customers to reuse storm water at all sites. $843,000 annually, and significantly reduce food waste. As a fast-casual restaurant chain, QDOBA is dedicated IGT Solutions sets comprehensive vendor registration to rigorous processes for vetting new suppliers and for and evaluation processes to ensure the company monitoring existing suppliers on human and animal procures the highest-quality products and services. IGT rights and worker welfare issues. The company’s Vendor analyzes the information provided by new vendors to Code of Conduct prohibits forced or child labor, and assess each vendor’s potential level of risk, requesting QDOBA’s Supplier Expectations Manual encourages additional materials if necessary, before finalizing vendor suppliers to adopt an animal welfare program to ensure assessments and submitting them for the Procurement the safety and well-being of animals. In 2019, QDBOA’s Head’s approval. Once accepted, vendors are subject to food safety and quality assurance personnel conducted IGT’s annual evaluation process, which starts each April nearly 20 in-person audits of high-risk suppliers and new when the Procurement Head evaluates every vendor potential suppliers. QDOBA also added a plant-based and assigns them a rating. Vendors rated as poor are 28


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    2019 ESG ANNUAL REPORT meat alternative at all its US-based locations, and in moisture content of forest fire fuel loads as well as local 2019, QDOBA restaurants sold nearly 540,000 pounds meteorological conditions. This monitoring network of plant-based meat alternative products. By providing enables Forest Fire Management Victoria to assess consumers with vegetarian options, QDOBA has helped real-time ambient forest conditions to make informed save the land area equivalent of 2,697 football fields that decisions for high-risk areas. were not needed for farming, and the volume equivalent of some 363 million bottles of water. To monitor compliance risks in CBR Fashion Group’s supply chain, the company uses a social compliance As an infrastructure services provider, Ventia is program that requires suppliers to complete self- committed to harnessing the power of technology assessments, and to disclose any subcontractor to and sustainability to provide clients with quality, eco- which production steps are outsourced. This establishes friendly project solutions. In 2019, Ventia introduced an initial risk level for each supplier before it is its Environmental Lead, Engage, Analyze and Discuss onboarded. Following this initial assessment, a social (LEAD) initiative to help management identify and assessment is conducted within the next 30 days by encourage environmentally safe behavior, and provide a third-party auditor. The social assessment covers feedback for improvement before environmental harm issues such as child and forced labor, working hours, occurs. As one of the first companies in Australia to offer wages, workers’ safety, and social and environmental environmental remediation services, Ventia has been protection, and includes an on-site visit to verify helping clients address contamination in soil, sediment, compliance. Any areas of non-compliance identified surface water, and groundwater for more than three by the auditing process are set forth in corrective- decades. Over that time, Ventia’s Environmental Services action plans, and suppliers are required to provide team delivered solutions on more than 140 major evidence of remediation, as applicable. In the event of projects, including some of Australia’s largest and most a “zero-tolerance grading,” subsequent on-site visits are complex sites requiring innovative approaches to local conducted to verify compliance. In 2019, CBR Fashion sustainability issues. For example, the Environmental Group terminated contracts with 18 suppliers that Monitoring team designed an automated fuel moisture– received a “zero-tolerance grading” and failed to show monitoring solution that runs on solar power, to measure reasonable improvements. ESG Opportunities in Real Assets 87 % of property managers reported having recycling initiatives in place Nearly 300 properties owned by Apollo-managed funds collectively recycled more than 800 MT of waste in 2019. Hurstville Central alone recycled 250 MT of paper, plastic, cardboard, glass, and aluminum, and properties operated by ADH Hotels & Resorts expanded their recycling to include organic waste. To ensure full and accurate compliance with its recycling program, Tifco Hotel Group has instituted a “no landfill” policy, and engaged a third-party waste hauler to train each property’s staff on how to properly separate recyclable materials. In 2019, Hilton Atlanta imposed a global ban on the use of plastic straws as part of its goal to decrease its properties’ environmental footprint by 50% by 2030. Water conservation is another area where property operators have taken measures to limit unnecessary water use, with 57% of operators practicing water reduction techniques. The Tullahennel wind farm in Ireland operates a rainwater harvesting system that supplies reclaimed water to its substation buildings. For many properties, responsible consumption also means responsible maintenance. For example, 1801 West End in Nashville, TN, has service contracts in place for preventative maintenance and inspection of the property’s chiller, air compressor, generator, and HVAC equipment. 29


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    2019 ESG ANNUAL REPORT Select Sustainable Production and Consumption Data Energy Intensity Waste Intensity Percent Water Intensity Water Consumption Number of Fuel Intensity1 ESG Supplier Supply Chain Company (kWh/$MM (MT/$MM of Total Waste (gal/ $MM Recycling/Reuse Reduction Supplier (gal/vehicle) Function Code of Conduct Diligence revenue) revenue) Recycled revenue) Initiatives2 Initiatives Inspections Consumer Discretionary Company A 8,894.6 1,223.6 1.5 0.5 6,108.7 — — 0 — Company B 308,004.7 — 68.6 0.1 163.6 2 Company C 237,451.7 189.2 16.4 0.1 689,162.6 0 Company D — 1,067.5 — — — — 2 — Company E 304,651.3 — 14.5 0.2 351,597.1 3 Company F — — — — — 2 — Company G 3,163.3 — — — — 0 Company H 4,083.7 — 0.8 0.3 5,788.2 5 Company I 34,766.4 118.6 1.2 0.2 46,146.4 0 Company J 10,684.3 840.9 — — — — 9 Company K 16,120.8 598.0 5.0 1.0 4,357.9 546 Company L 22,065.6 863.9 0.8 0.6 5,508.8 — Company M 77,800.5 1,103.2 10.3 0.2 81,910.7 10 Company N 157,682.6 — — — 12,703,862.7 947 Company O 28,361.1 3,364.8 5.8 0.7 10,741.2 29 Company P 103,277.0 — 0.7 0.2 240.0 — 16 Company Q 3,402.1 1,336.0 — — — 12 Company R 33,075.4 — — — 2,386.7 432 Consumer Staples and Healthcare Company A 62,573.8 6,004.0 12.6 0.6 35.8 14 Company B 131,840.2 — — — 81,533.5 1 Company C 209,238.9 891.8 28.0 0.0 124,666.3 0 Energy3 Company A 23,985.8 501.7 42.8 0.0 12,414,377.6 — 20 Company B — — — — 1,741,751.3 0 Company C 104,299.5 2,615.2 438.0* — 2,240,335.2 0 Company D 1,686,763.1 — 15.0 0.9 16,796.6 32 Company E 12,379.6 3,431.9 3.6 0.0 276,487.3 1 Company F 3,083.1 743.0 — — 0.0 — 0 Company G 69,774.3 2,237.9 — — 7,725,056.4 — — — — Company H — 2,752.0 — — — — — — 0 — Company I 262,710.4 1,950.7 3.7* — 73,995.2 2 Company J 1,904,327.9 2,658.2 2.1* — 3,752,128.4 — Company K 1,981.9 2,217.6 0.0 1.0 124.7 12 Company L 1,809,425.3 2,288.6 32.0 0.1 136,279.7 77 Key Energy Reduction Initiatives Waste Reduction Initiatives Water Reduction Initiatives Fuel Reduction Initiatives No Process in Place to Monitor or Vet Suppliers Process in Place to Monitor Existing Suppliers Process in Place to Vet Suppliers Processes in Place to Vet and Monitor Suppliers — Company Did Not Report 30


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    2019 ESG ANNUAL REPORT Select Sustainable Production and Consumption Data Energy Intensity Waste Intensity Percent Water Intensity Water Consumption Number of Fuel Intensity1 ESG Supplier Supply Chain Company (kWh/$MM (MT/$MM of Total Waste (gal/ $MM Recycling/Reuse Reduction Supplier (gal/vehicle) Function Code of Conduct Diligence revenue) revenue) Recycled revenue) Initiatives2 Initiatives Inspections Financials4 Company A 617.4 — — — — 50 Company B 27,857.9 626.7 — — — 87 Company C 857.2 25,073.9 0.0 0.3 554.6 8 Company D 6,808.5 — — — — — 0 Company E 1,638.7 384.1 — — — 7 Company F 493.0 — — — — 1 Company G 5,774.2 361.4 — — 1,998.0 0 Company H 50,252.7 440.8 — — — 0 Company I 35,108.1 0.0 1.1 1.0 7,956.2 0 Company J 7,729.6 — — — — — 4 Company K 4,451.6 376.9 — — 2,975.5 0 Industrials and Materials Company A 24,679.5 3,049.8 5.9 0.4 3,472.0 — Company B 4,262,374.8 — 24.3 0.6 1,429.7 0 Company C 2,307.1 695.3 32.5 0.6 18,199.6 34 Company D 229,885.3 3,453.5 14.6 0.5 134,767.6 — Company E 1,770.5 550,185.9 0.4 0.3 1,562.1 18 Company F 326,541.3 1,234.9 0.0 — 64,828,578.5 3 Company G 184,081.5 — 2.8 0.8 273,184.1 64 Company H 44,152.4 7,478.9 198.1 0.0 231,386.7 0 Company I 4,163.8 986.5 7.0 0.2 5,779.3 8 Information Technology and Communication Services5 Company A 152,368.5 — 0.3 0.6 — 0 Company B 3,329.9 565.6 0.0 — — 0 Company C 31,603.3 308.6 0.5 0.1 21,579.3 0 Company D 46,816.9 228.0 23.3 1.0 — 0 Company E 26,748.5 990.4 570.3 0.0 13,345.8 0 Key Energy Reduction Initiatives Waste Reduction Initiatives Water Reduction Initiatives Fuel Reduction Initiatives No Process in Place to Monitor or Vet Suppliers Process in Place to Monitor Existing Suppliers Process in Place to Vet Suppliers Processes in Place to Vet and Monitor Suppliers — Company Did Not Report * Indicates waste-to-landfill intensity only. 1. Applicable to companies with fleets of 10 or more vehicles only. 2. Applicable to companies that require the use of water in operations only. 3. Upstream oil and gas companies are exempt from reporting on waste recycled metrics. 4. Financials sector companies are exempt from reporting on waste and water metrics. 5. Information Technology and Communication Services sector companies are exempt from reporting on water metrics. 31


  • Page 36

    2019 ESG ANNUAL REPORT Climate Action Climate change threatens global infrastructure and the health, water, and food security of millions. Financial institutions have acknowledged their collective responsibility to help companies take action to understand, alleviate, and disclose their efforts to address these global concerns. 32


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    2019 ESG ANNUAL REPORT The Challenge Climate Action Data Overview How to achieve consistent, FIGURE 32 FIGURE 33 comprehensive calculation of Scope 1 and Scope 2 GHG Reporting Companies’ Scope 1 Reporting Companies’ Scope 2 GHG Emissions by Sector GHG Emissions by Sector emissions inventories? <1% <1% <1% The Opportunity 2% 3% 6% Develop a new tool 9% enabling companies to standardize their 37% 57% 22% 35% reporting Apollo was one of the first in its industry to ask companies 27% to report their Scope 1 and Scope 2 GHG emissions. Though Industrials & Materials businesses and investors are FIGURE 34 Energy increasingly concerned about Reporting Companies’ Consumer Staples & Heathcare climate change, The Conference Total GHG Emissions Consumer Discretionary Board and Bloomberg report Financials GHG Emissions (MT of CO2e) that, in 2018, only 23% of Communication Services & Scope 1 6,228,867 companies globally disclosed Information Technology their total GHG emissions. Scope 2 1,801,024 In 2019, Apollo developed a Total GHG Emissions 8,029,891 proprietary GHG emissions calculation tool, which uses the most recent emissions factors for stationary and mobile fuel combustion, and purchased electricity and heat. This has brought new levels 18,300+ vehicles in reporting 18.6M+ MWh of energy consumed by of accuracy, consistency, and companies’ fleets reporting companies comprehensiveness to reporting, since all companies now FIGURE 35 calculate their GHG inventory Reporting Companies’ Disclosure of GHG Emissions using the same emissions factors. Apollo’s tool also empowers companies to tailor their own emissions 80% Percent of Reporting Companies reduction programs to 60% simultaneously reduce costs and climate-related risks, and 40% benefit the environment. 20% 0% 2015 2016 2017 2018 2019 Scope 1 GHG Emissions Scope 2 GHG Emissions Total GHG Emissions 33


  • Page 38

    2019 ESG ANNUAL REPORT GHG Emissions, Energy and Fuel Consumption, and Climate-Related Risks GHG Emissions FIGURE 36 FIGURE 37 Reporting Companies’ Disclosure of Scope 1 Reporting Companies’ Disclosure of Scope 2 GHG Emissions vs. Sector Benchmarks GHG Emissions vs. Sector Benchmarks Communication Communication Services Services Consumer Consumer Discretionary Discretionary Energy Energy Financials Financials Industrials Industrials 0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 80% 100% Percent of Companies Percent of Companies Sector Disclosure Rate1 Reporting Companies 1. TCB/Bloomberg (2019). Energy and Fuel Consumption FIGURE 39 FIGURE 40 Percent of Reporting Companies Reporting Companies’ Vehicle Replacement with Fuel Reduction Initiatives1 and Retrofitting Initiatives 40% 1,000 800 30% 64% Number of Vehicles 600 20% 400 1. Excludes companies with fleets of fewer than 10 vehicles. 10% 200 0% 0 Replaced Replaced Replaced Fleet with with with Fuel- Retrofitting 37 reporting companies have fleets of 10 or more vehicles Hybrid Vehicles Electric Vehicles Percent of Reporting Companies1 Efficient Vehicles Vehicles Replaced/Retrofitted 1. Excludes companies with fleets of fewer than 10 vehicles. 34


  • Page 39

    2019 ESG ANNUAL REPORT Climate-Related Risks FIGURE 38 Reporting Company Sites in Areas of High or Extremely High Water Risk1 >75% 50%–75% 40% Percent of Sites of reporting companies have 25%–49% formalized processes for identifying climate-related risks <25% 0% 0 2 4 6 8 10 12 14 16 Number of Reporting Companies 2018 2019 1. Excludes reporting companies whose operations do not require the use of water. Areas of high or extremely high water risk identified using the World Resource Institute’s Aqueduct Water Risk Atlas (2019). FIGURE 41 FIGURE 42 Percent of Reporting Companies with Reporting Companies’ Disclosure Energy Reduction Initiatives of Energy Consumption 100% Percent of Reporting Companies 80% 69% 60% 40% 20% 0% 2013 2014 2015 2016 2017 2018 2019 164 LEED®-certified facilities owned or leased by reporting companies Reporting Companies 35


  • Page 40

    2019 ESG ANNUAL REPORT In 2019, ADT continued to explore methods to reliance on single suppliers and data centers that may decrease its GHGs by replacing nearly 20% of its be located in geographies prone to severe weather vehicle fleet with more fuel-efficient models. Through disruptions. In addition, the company has operations a partnership with Ford, ADT replaced over 1,300 at three ENERGY STAR® or LEED-certified facilities and older vehicles with a new model, gaining +2 MPG in selects renewable energy providers through electric fuel economy. This improvement is due to a smaller utility programs. Specialized air filters at the company’s displacement engine that generates performance equal London office have reduced Rackspace’s CO2 emissions to the older model, and to a new 8-speed transmission by approximately 2,000 kg per year, and in 2019, the replacing the 6-speed unit. As ADT continues to company deployed four smart-building automation upgrade its fleet, it is closely monitoring the potential systems that utilize artificial intelligence to optimize for electrification of new vehicles and the integration energy efficiency. of hybrid vehicle replacements. PlanetCast has implemented several energy consumption initiatives to reduce its environmental impact. The company has fitted all light fixtures in its corporate buildings with energy-efficient LED bulbs, and electrical 35% of reporting companies with fleets utilize appliances are selected and purchased based on high- power energy efficiency ratings. Company appliances also employ invertor motor technology to minimize energy waste, while electrical equipment is regularly route optimization techniques monitored and corrected to meet energy specifications. To help reduce Scope 3 GHG emissions, PlanetCast offers a free pickup and drop-off service for employees going from company headquarters to nearby public Coinstar continued cutting its fleet’s GHG emissions transportation, encouraging them to take mass transit through more efficient vehicles, and driver behavior and limit the environmental impact of their commutes. modification. Coinstar’s fleet of 200 passenger vehicles is In 2019, Aspen formed the Aspen Green Team, 100% hybrid; the company updates its commercial motor comprised of employees who are passionate about vehicle specifications to optimize fuel performance for sustainability practices within Aspen’s offices and each new order, which in 2019 led to 40 vehicles being who work to reduce the company’s environmental replaced by more fuel-efficient models. More efficient impact. The Aspen Green Team conducted an initial engines and better battery life in the new hybrid vehicles study to assess the company’s current performance have cut fuel consumption by more than 50%. When and to identify opportunities for improvement in 2020 upgrading trucks, Coinstar opts for lighter-weight vehicle and beyond. Aspen, which generated approximately parts that minimize unnecessary space and materials 3,500 MT of CO2e in 2019 from its corporate travel and compared to previous orders, while ensuring that safety electricity consumption, has begun to purchase carbon is never compromised. The company provides drivers credits from Gold Standard–certified offset programs in with fuel-saving tools and tips for better routing, which Panama to offset these emissions. have helped reduce miles driven to 8.6 million in 2019, compared to 9.2 million in 2018. In addition to reducing After testing and comparing results with two energy Scope 1 GHG emissions generated by its fleet, Coinstar management systems over the past two years, CEC encourages employees at corporate headquarters to Entertainment installed smart thermostats in all of its US report their commuting habits to the Department of locations. The system was designed and implemented to Transportation as part of a study to provide incentives optimize performance of HVAC systems, providing the for reducing Scope 3 GHG emissions. company with centralized control of these systems’ energy usage. This enables the company to monitor energy Rackspace consults with internal and external experts to usage at these locations monthly, and to actively identify identify climate-related risks and to manage processes and address any deviations from standard energy use. associated with these factors. Internally, two primary Since implementing this system, kilowatt usage has risk mitigation teams, the Business Continuity Team decreased by 11% year-over-year in applicable restaurants, and the Supply Chain Contingency Team, address saving these locations an average of more than 3,000 kWh climate-related risks. Based on past supply chain audits, per month, for $4,700 in annual energy cost savings. Rackspace has diversified its supply chain to avoid 36


  • Page 41

    2019 ESG ANNUAL REPORT OLB’s commitment to the environment is evidenced by evaluated and adjusted traffic patterns within its its goals and initiatives to reduce carbon emissions and facilities to reduce both truck traffic and dust emissions. energy and paper consumption. One hundred percent Tidewater Logistics further reduced dust emissions by of OLB’s purchased electricity comes from renewable using water trucks and dust suppression systems. sources, and in 2019 the company reduced its CO2 emissions intensity to 1,702 kg per employee — a 45% Jupiter Resources continues to evolve its technology decrease from the company’s 2006 baseline of 3,778 kg and equipment to improve operations and minimize per employee. OLB’s locations are regularly renovated to the company’s environmental footprint. The company increase their operational efficiency: for example, from recently introduced a solar and methanol hybrid power 2018 to 2019, OLB decreased its year-over-year heating fuel cell solution, which is now incorporated into Jupiter’s energy consumption by 7.8%. Increased end-to-end standard well design and reduces GHG emissions by up digitization efforts moved customer communications to 97% compared to thermal electric generators. In 2019, online and replaced traditional paper-based signatures the company also introduced a new sand separator at with eSigns, decreasing paper consumption by 12% from seven locations, which Jupiter estimates will reduce GHG 2016 to 2019 and saving the printing and dispatch of emissions by 99%, or approximately 88 MT of CO2e per more than 8,000,000 customer letters. OLB also shows year compared to previous models. In addition, Jupiter its commitment to the environment through funding recently commissioned and placed into operation its first public programs for energy efficiency. Funding under fully pneumatic vent-free site. The company anticipates these programs amounted to 9% in mortgage loans/ that annual venting volumes from the site’s well pad real estate financing volume, 34% in investment finance, equipment will drop from approximately 740 MT of CO2e and 22% across all client segments. Funding applications in 2019 to 0.6 MT of CO2e. are now 95% digital, and in-house processing is almost In 2019, Sun Country Airlines continued its completely paperless. commitment to reducing its environmental footprint In 2019, Tidewater Logistics made strides in reducing through numerous energy consumption and fuel truck traffic, fuel usage, and dust emissions. By shifting reduction initiatives. The company decreased its tonnage to electric-driven equipment, Tidewater Logistics energy consumption from 2,612,803 kWh in 2018 to reduced its year-over-year diesel fuel consumption by 2,358,663 kWh in 2019, due in part to the consolidation nearly 20%, from 101,042 gallons in 2018 to 82,365 gallons of the company’s hangar and headquarter facilities, in 2019. In addition, Tidewater Logistics continually which were retrofitted with LED lighting, and the installation of energy-efficient rooftop air conditioning units to better regulate air temperature fluctuations. Sun Country’s Fuel Committee also implemented several new FIGURE 43 fuel reduction initiatives in 2019 in an effort to reduce Reporting Companies’ Disclosure of Energy aircraft weight, improve flight planning, and streamline Reduction Initiatives vs. Sector Benchmarks taxi procedures and ground operations. The company anticipates that the new fuel reduction initiatives will lead to roughly $3 million in cumulative annual savings, and Communication the Fuel Committee continues to review new potential Services fuel-saving techniques going forward. Consumer Discretionary Northwoods Energy has taken steps to align its Energy activities with TCFD recommendations; it has identified climate-related risks and has processes in place for Financials monitoring and managing these risks. The company is headquartered at 17th Street Plaza in Denver, CO, Industrials which has an ENERGY STAR rating in the top 6% in the nation and was the first multi-tenant property in 0% 20% 40% 60% 80% 100% the Rocky Mountain Time Zone to earn LEED-EB O&M Percent of Companies Gold Certification. At the company’s remote well sites, Northwoods endeavored to reduce its Scope 1 Sector Disclosure Rate1 Reporting Companies 1. TCB/Bloomberg (2019). 37


  • Page 42

    2019 ESG ANNUAL REPORT Climate-related risks, such as flooding, wildfires, and FIGURE 44 extreme temperatures, are among the potential hazards. Reporting Companies’ Disclosure of Energy Once a facility has identified a climate-related risk, a Consumption vs. Sector Benchmarks Hazard Vulnerability Analysis (HVA) is completed, which assesses the likelihood of the particular risk, the level of preparedness of the facility, and the facility’s ability to Communication Services recover and mitigate future impacts. Consumer Discretionary Redbox operates a fleet of approximately 450 vehicles Energy across the US, both combustion and hybrid sedans and SUVs, which collectively represent the largest source Financials of the company’s Scope 1 GHG emissions. To help reduce Scope 1 GHG emissions generated by its fleet, Industrials approximately 47% of Redbox’s fleet are hybrid vehicles. Information In addition, in 2019 Redbox replaced 123 vehicles, or Technology more than one-quarter of its fleet, with more fuel- 0% 20% 40% 60% 80% 100% efficient models. As a result, year-over-year fleet statistics Percent of Companies improved dramatically: while total mileage driven Sector Disclosure Rate1 Reporting Companies increased by 4.5%, fuel consumption decreased by 1.7%, and total fleet MPG increased by 6.2%. 1. TCB/Bloomberg (2019). Ridgeback Resources prioritizes reducing its carbon footprint and impact on the environment through a variety of energy consumption and emissions reduction GHG emissions in 2019 by replacing diesel-powered initiatives. In 2019, Ridgeback reduced Scope 1 GHG generators with a buried power line system that connects Emissions by 29,100 MT of CO2 through the replacement 14 well sites. The company also has installed control and or retrofitting of 238 high-bleed pneumatic devices monitoring measures and conducts annual LDAR audits with low- or zero-bleed alternatives at the company’s of all well site facilities to monitor fugitive emissions. Alberta sites. To further reduce emissions and energy Where fugitive emissions are detected, Northwoods consumption, Ridgeback also conducts a leak detection takes actions to identify the source and correct and repair (LDAR) program at facilities in Alberta in line the situation — for example, flange gasket repair or replacement and subsequent testing to verify that fugitive emissions have been eliminated. 1,371 A new energy management program was developed and implemented by LifePoint Health in 2019 to provide comprehensive monitoring of the company’s energy consumption. Each hospital receives an energy scorecard vehicles replaced or retrofitted to monitor its use of electricity and natural gas monthly. by reporting companies Baselines created using 2018 and 2019 consumption data are combined with weather normalization factors, to predict monthly usage for 2020. When deviations from the baseline are identified, LifePoint Health’s energy management team reviews potential causes and takes with the Canadian Association of Petroleum Producers’ corrective action where necessary. Each hospital is best practices for the management of fugitive emissions. also assigned an energy use intensity score, used to Ridgeback also has optimized pump-jack rates in its identify potential energy reduction projects such as Southeast Saskatchewan business unit: by calibrating conversion to LED lighting and updating room ventilation pump-jack rates to better suit fluid production volumes, schedules. Every year, each LifePoint Health facility also Ridgeback has decreased electricity consumed on sites identifies and discusses all hazards that could directly by some 8% in 2019. affect patient care or cause a business interruption. 38


  • Page 43

    2019 ESG ANNUAL REPORT In 2019, Verallia partnered with PUR Project, a social Lumileds mitigates its environmental impact through enterprise dedicated to regenerating global ecosystems, internal efficiency programs and by setting site-specific to establish a climate program to voluntarily offset the and company-wide targets and goals for environmental company’s GHG emissions. Verallia has committed to an performance; these led to a 9% decrease in energy initial five-year period of reforestation and agroforestry consumption in 2019. Examples of these initiatives projects in Latin America, which will lead to the include converting to LED lighting, upgrading heating planting of more than 100,000 trees per year and offset systems, and shutting down equipment during low approximately 1% of the company’s total GHG emissions production periods to reduce energy consumption. each year. In Brazil, Verallia also supports Nordesta, the Collectively, these efforts are expected to save more than local partner of PUR Project, which works to protect water 12.1 gWh of energy annually, equivalent to approximately resources, restore biodiversity, and promote education $1.5 million per year. Beyond its own operations, Lumileds in the Minas Gerais region near the Verallia Jacutinga LED lighting products have helped end-users to reduce plant. In addition, Verallia has established a program their GHG emissions by an amount 35 times greater than focused on the sustainable integration of the company the company’s own GHG emissions in 2019. Compared sites into their local environments and landscapes. to conventional lighting, Lumileds products emitted 49% Through this initiative, Verallia supports the regeneration less total carbon dioxide in 2019, saving 3,766 kilotons of and preservation of local ecosystems by taking steps to CO2 in the illumination market. In the automotive market, reduce noise pollution, and by planting endemic species LED products saved 162 kilotons of CO2 compared to to support each area’s natural biodiversity. traditional lighting. ESG Opportunities in Real Assets 70% of third-party property managers reported having energy reduction initiatives in place Several third-party property operators reported taking actions to reduce their GHG emissions in 2019. Two Steelbridge Office Platforms properties installed electrical regenerators on elevator motors to minimize energy consumption, and two Cincinnati Office Portfolio properties also modernized elevators to improve operational efficiencies. All four Cincinnati Office Portfolio properties owned by Apollo-managed funds have switched from fluorescent fixtures to new LED lighting with motion sensor detection, as have the BCG Centre and 1801 West End. Other initiatives by third-party property operators focus on broader external strategies to counterbalance GHG emissions and support sustainable infrastructure. Hyatt Houston, for example, recently purchased carbon offsets, and Cincinnati Office Portfolio properties allow for the installation of beehives to encourage local sustainable conservation practices. Volta Data Centre has entered into a Climate Change Agreement with the UK Environmental Agency, which measures the data center’s reduction of power usage based on predefined targets and has led the operator to procure energy exclusively from wind farms. At the Tullahennel wind farm, in County Kerry, Ireland, 13 turbines are equipped with integrated power storage technology that produces renewable energy even in the absence of wind, eliminating the need for conventional fossil fuel energy in still weather. In 2019, Tullahennel generated more than 99,000 MWh of renewable wind energy, which is equivalent to avoiding more than 257.5 million MT of CO2. 39


  • Page 44

    2019 ESG ANNUAL REPORT Select Climate Action Data Scope 1 Scope 2 Total GHG Emissions Ratio of Scope 1 GHG Percent of Sites with GHG Emissions Climate-Related Company GHG Emissions Intensity GHG Emissions Intensity Intensity Emissions to Scope 2 GHG Renewable Energy Use High or Extremely High Reduction Initiatives Risk (MT of CO2e/$MM revenue) (MT of CO2e/$MM revenue) (MT of CO2e/$MM revenue) Emissions Water Risk 1 Consumer Discretionary Company A 13.9 3.8 17.7 3.7:1 — — — Company B — 135.4 135.4 — — Company C 20.2 57.8 78.0 0.3:1 <25% Company D — — — — — — — Company E 30.9 51.9 82.8 0.6:1 <25% Company F — — — — — Company G — 2.2 2.2 — — Company H 0.0 1.5 1.5 0.0:1 — Company I 0.0 24.6 24.6 0.0:1 — Company J 2.5 3.8 6.2 0.7:1 — — Company K 2.1 6.5 8.6 0.3:1 — Company L — 15.6 15.6 — — Company M 8.0 24.5 32.5 0.3:1 0% Company N 12.3 78.3 90.6 0.2:1 <25% Company O 3.6 12.6 16.2 0.3:1 <25% Company P — — — — <25% Company Q 8.8 1.0 9.8 8.7:1 — Company R — 8.8 8.8 — 0% Consumer Staples and Healthcare Company A 2.3 14.9 17.2 0.2:1 — Company B 9.6 41.1 50.7 0.2:1 <25% Company C 21.0 40.6 61.5 0.5:1 <25% Energy Company A 1,548.5 13.6 1,562.1 113.7:1 0% Company B 1,788.0 — 1,788.0 — 0% Company C 221.3 65.1 286.4 3.4:1 >75% Company D 547.5 — 547.5 — 0% Company E 26.8 7.0 33.8 3.8:1 0% Company F 0.8 1.8 2.5 0.4:1 0% Company G 67.3 49.3 116.7 1.4:1 <25% Company H — — — — — — — Company I 1,103.9 148.6 1,252.6 7.4:1 <25% Company J 521.2 205.5 726.6 2.5:1 >75% Company K 0.5 0.0 0.5 10,417.8:1 0% Company L 843.1 71.1 914.2 11.9:1 0% Key Scope 1 GHG Emissions Reduction Initiatives Scope 2 GHG Emissions Reduction Initiatives Scope 3 GHG Emissions Reduction Initiatives Company Has Not Identified Climate-Related Risks Company Has Identified Climate-Related Risks Company Has Identified and Monitors Climate-Related Risks — Company Did Not Report 40


  • Page 45

    2019 ESG ANNUAL REPORT Select Climate Action Data Scope 1 Scope 2 Total GHG Emissions Ratio of Scope 1 GHG Percent of Sites with GHG Emissions Climate-Related Company GHG Emissions Intensity GHG Emissions Intensity Intensity Emissions to Scope 2 GHG Renewable Energy Use High or Extremely High Reduction Initiatives Risk (MT of CO2e/$MM revenue) (MT of CO2e/$MM revenue) (MT of CO2e/$MM revenue) Emissions Water Risk 1 Financials Company A — 0.2 0.2 0.0:1 — Company B 1.6 0.1 1.7 14.4:1 — Company C 0.1 0.4 0.5 0.3:1 25%–49% Company D 69.1 1.7 70.7 41.0:1 — Company E 0.2 0.3 0.5 0.7:1 — Company F 0.0 0.2 0.2 0.0:1 — Company G 1.9 0.7 2.6 2.6:1 — Company H 3.9 13.5 17.4 0.3:1 0% Company I 4.6 0.0 4.6 — — Company J — — — — — Company K — 1.6 1.6 — 0% Industrials and Materials Company A 108.1 3.8 111.9 28.3:1 <25% Company B 965.5 190.0 1,155.5 5.1:1 <25% Company C 1.2 0.8 2.1 1.4:1 — Company D 10.3 71.6 82.0 0.1:1 0% Company E 1,222.0 1.3 1,223.3 906.1:1 0% Company F 511.4 195.6 706.9 2.6:1 >75% Company G 11.9 70.2 82.1 0.2:1 <25% Company H 212.9 5.3 218.2 40.5:1 <25% Company I 15.7 3.6 19.3 4.3:1 <25% Information Technology and Communication Services Company A 0.2 50.3 50.4 0.0:1 — Company B 0.3 2.3 2.6 0.1:1 — Company C 2.2 8.7 10.8 0.3:1 25%–49% Company D 0.2 31.7 31.9 0.0:1 — Company E 7.4 8.4 15.8 0.9:1 — Key Scope 1 GHG Emissions Reduction Initiatives Scope 2 GHG Emissions Reduction Initiatives Scope 3 GHG Emissions Reduction Initiatives Company Has Not Identified Climate-Related Risks Company Has Identified Climate-Related Risks Company Has Identified and Monitors Climate-Related Risks — Company Did Not Report 1. Applicable to companies that require the use of water in operations only. 41


  • Page 46

    2019 ESG ANNUAL REPORT Respect for Workers Teams with higher employee engagement enjoy lower costs, a safer workforce, and generally outperform their peers. Since the inception of Apollo’s ESG Program, the firm has recognized the links between employee engagement, safety, and reporting company performance. 42


  • Page 47

    2019 ESG ANNUAL REPORT The Challenge Workforce Data Overview How to help veterans find the right jobs for their talents and skills? + The Opportunity Develop a website 290,000 reporting company employees that aggregates job openings and + matches military skills and talents to employers’ needs 11,300 new hires by reporting companies in 2019 As one of the world’s largest alternative investment managers, Apollo is uniquely positioned to FIGURE 45 FIGURE 46 help veterans find opportunities Percent of Reporting Percent of 2019 New Hires for meaningful employment. US Company Employees Who by Reporting Companies Bureau of Labor Statistics data Identify as Female Who Identify as Female shows that, in 2019, there were 284,000 unemployed veterans, more than 60% of them between the ages of 18 and 54. Apollo- managed funds invest in many companies committed to hiring and retaining veterans, National Guard, Reserve, and military spouses and partners, as part of 53% 41% attracting and retaining a diverse and talented workforce. To help them achieve this objective, we launched the Apollo Veterans Talent Network website in 2019. It aggregates more than 8,000 job openings across companies + owned by Apollo-managed funds, and allows veterans to search directly by their military occupational specialty (MOS) 10,000 reporting company employees who identify code, Air Force Specialty as veterans, National Guard, or Reservists Code (AFSC), or Navy Enlisted Classification (NEC) code to find civilian jobs that match + their experience. 3,000 new hires by reporting companies in 2019 who identify as veterans, National Guard, or Reservists 43


  • Page 48

    2019 ESG ANNUAL REPORT Employee Engagement, Workforce Safety, and Workforce Diversity Employee Engagement FIGURE 47 FIGURE 48 Percent of Reporting Companies with Reporting Company Employee Employee Engagement Initiatives Engagement Initiatives Employee Newsletters Employee Recognition Programs/Platforms 95% Social Events Town Halls Volunteer Activities 0% 20% 40% 60% 80% 100% Percent of Reporting Companies 2017 2018 2019 Workforce Diversity FIGURE 51 FIGURE 52 Reporting Company Gender Diversity of Reporting Diversity Initiatives Company Employees 45% 60% Percent of Reporting Company Employees 40% 50% Percent of Reporting Companies 35% 30% 40% 25% 30% 20% 15% 20% 10% 10% 5% 0% 0% Affinity Recruitment Sr. Mgmt. Training Tracking Veterans Total New Hires CEO Groups Programs Mentorship Programs Diversity Hiring Employees Direct Reports Programs Data 2018 2019 Aggregate Median 44


  • Page 49

    2019 ESG ANNUAL REPORT Workforce Safety FIGURE 49 FIGURE 50 Percent of Reporting Companies Types of Driver Safety Indicators Tracked with Employee Safety Initiatives by Reporting Companies1 Accidents/Incidents Costs Associated with Accidents/Incidents Fatalities from Accidents/Incidents 93% Injuries from Accidents/Incidents Lost Time from Accidents/Incidents Other 0% 10% 20% 30% 40% 50% 60% 70% 80% Percent of Reporting Companies 2018 2019 1. Excludes companies with fleets of fewer than 10 vehicles. 12 reporting companies with zero safety incidents in 2019 81% of reporting companies with fleets have driver safety initiatives FIGURE 53 FIGURE 54 Reporting Companies’ Disclosure of Workforce Percent of Reporting Companies with Anti-Discrimination, Gender Diversity vs. Sector Benchmarks Anti-Harassment, and Equal Opportunity Policies 100% Communication Services Percent of Reporting Companies 80% Consumer Discretionary 60% Energy 40% Financials 20% Industrials 0% 0% 20% 40% 60% 80% 100% Anti- Anti- Equal Discrimination Harassment Opportunity Percent of Companies Sector Disclosure Rate1 Reporting Companies 2015 2016 2017 2018 2019 1. TCB/Bloomberg (2019). 45


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    2019 ESG ANNUAL REPORT With a fleet of approximately 6,500 vehicles, ADT assessments upon request, to ensure all employees prioritizes driver safety and has instituted several benefit from a safe and healthy working environment. programs, including the ADT Motor Vehicle Record (MVR) program, to improve fleet safety performance. In addition to maintaining OHSAS 18001 certification, Using MVR data, drivers are ranked based on their safety ecoATM’s processing facility in Louisville, KY, has a performance, and incidents are reviewed and used to number of health and safety initiatives in place that have assign driver-specific safety training. All company drivers helped the company to achieve its goal of zero lost time have access to online training modules that cover topics due to injury for four consecutive years. The facility’s such as speeding, collision avoidance, lane change safety teams meet monthly, conduct evacuation drills techniques, and distracted driving. In addition to ongoing twice a year, and complete annual safety hazard safety training, ADT has added new safety technology assessments for each department and workstation. In in upgraded vehicles, such as collision warning and addition to focusing on workforce health and safety, autonomous braking. As a result of these and other ecoATM also engages employees through a recognition efforts, ADT’s 2019 total recordable injury incident rate program that promotes positive behaviors and fosters was cut by 49% to 1.07, and the total LTIR was cut by 50% employee wellness. Through this program, employees to 0.34, compared to the baseline year of 2012. During can recognize their colleagues for workplace achievements the same period, the company also achieved a significant to earn points that can be redeemed for cash or donated 41% reduction in days lost. Even with the addition of to charity. ecoATM also held several events in 2019 to 2,000 new vehicles to the company’s fleet in the past foster engagement and team building, including a San two years, the numbers of injuries and collisions per Diego Padres baseball game and barbecue, chili contest, million miles driven have been reduced by 35% and 10%, Office Olympics, and recreational game tournaments. respectively, since 2012. As a member of the Network To achieve and maintain safety across all its business of Employers for Traffic Safety, a collaborative group units, Shutterfly has implemented numerous initiatives of employer road safety professionals, the company to prevent hazards and incidents. In 2019, Shutterfly’s regularly benchmarks its safety programs to identify manufacturing units demonstrated industry-leading those that have been effective at other companies, and performance with a TRIR of 1.03 (compared to industry which ADT could adopt. top quartile TRIR of 1.30) and a DART of 0.81, well below the industry average DART of 1.20. All Shutterfly locations take part in regular safety communications through FIGURE 55 weekly emails, signs, and flyers posted throughout Reporting Companies’ Workforce the facilities. One of the most effective methods for Safety Initiatives by Type communicating important safety messages is the company’s Safety TV program, which displays recurring Shutterfly-branded safety reminders and tips on easily 100% visible screens placed throughout its facilities. In addition to regular safety communications, Shutterfly has Percent of Reporting Companies 80% employee safety committees at several locations that meet regularly to review safety incidents, expand safety 60% culture, and ensure employees are trained and prepared 40% for responding to potential emergencies. To help ensure that safety issues are quickly identified and resolved, 20% Shutterfly uses a centralized safety management system for incident reporting, hazard identification, and 0% maintaining corrective actions. Ergonomic Leading Periodic Safety Safety Other Assessments Indicators Safety Policy Trainings Meetings Ensuring safety in the workplace is of the utmost importance to Maxim Crane, as evidenced by the company’s industry-leading Experience Modification Rate of 0.54 (vs. the industry average of 1.0). The An office-based company, Catalina focuses on employee company conducts approximately 350 unannounced wellness by periodically undertaking ergonomic job site audits per month, in which members of the assessments. In the UK, the company has a trained and safety, operations, and sales divisions visit sites in dedicated employee to conduct individualized ergonomic person and review all facets of crane location and 46

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