Pillar 3 disclosures (unaudited)

Hermes GPE governance committees

The Executive Committee is ultimately responsible for the oversight of risk management and the governance structure of Hermes GPE is as above.

The Executive Committee meets at least quarterly and has ultimate responsibility for the management of Hermes GPE. Its responsibilities include strategy, business planning, profit and cash flow projections, regulatory capital management, risk management and control. There are a number of policies that are communicated throughout the business and the Executive Committee has overall responsibility for approving and ensuring compliance with the same.

The Executive Committee is ultimately responsible for the appropriate apportionment of responsibilities to each business area and is kept informed of business activities via interactions with senior professionals and key committees.

The Executive Committee delegates separate responsibility for the day-to-day operation of the Private Equity and Infrastructure businesses to the Private Equity Management Committee and the Infrastructure Management Committee, (together ‘the Management Committees’ or ‘MCs’) respectively. Investment decisions are made by stand-alone Investment Committees for each business area comprising the Head of Private Equity or Head of Infrastructure and other specified investment professionals relevant to the business area concerned. The relevant Investment Committee meets as and when required.

In private equity, there is a dedicated portfolio construction and analytics function (‘PCA’) that makes client vehicle allocation recommendations to the Investment Committee according to a predetermined allocation policy which is reviewed annually. The Investment Committee is further supported in this area by the Hermes GPE Investment Strategy Advisory Group (‘ISAG’) which comprises private equity investment executives as well as senior independent external advisors including the Independent Non-Executive Chairman of Hermes GPE and the Chair of the Valuation Committee. The ISAG meets semi-annually to formally review overall investment strategies and portfolio construction, particularly in the context of the macroeconomic environment.

For each business area, the Valuation Committee comprises independent individuals whose remuneration is not linked in any way to the value of any of Hermes GPE’s investments. The Valuation Committees meet on a quarterly basis.

The Remuneration Committee meets as and when required and is responsible for all aspects of remuneration policy and application. The MCs of Hermes GPE are responsible for identifying risks, establishing controls to mitigate these risks, monitoring these risks to assess if they are being effectively managed and ensuring any errors or breaches are addressed. As Hermes GPE grows, the MCs meet at appropriate intervals to consider the firm’s short, medium and long-term resource requirements, including staff numbers and structure, information technology and communications requirements, and the adequacy of office accommodation. 

The Strategic Risk and Compliance Director reports to the Executive Committee and helps to ensure Hermes GPE remains compliant with all relevant regulations and for monitoring its compliance with these regulations, client investment restrictions and guidelines via a Compliance Monitoring Programme. The Strategic Risk and Compliance Director is supported by a team of specialists from Hermes Fund Managers Limited. Together, this team advises and assists Hermes GPE in adhering to regulations and best practice through:

1. Advising the business regarding regulatory developments and changes
2. Providing training on the regulatory environment and related issues
3. Developing and communicating appropriate policies and procedures
4. Implementing a quarterly Compliance Monitoring Programme
5. Undertaking risk based reviews e.g. in respect of errors, breaches and complaints
6. Reviewing Financial Promotions and marketing materials
7. Liaising with local experts outside of the UK where necessary

The Strategic Risk and Compliance Director is responsible for reporting to the authorities any money laundering suspicions. There have been no reports made in the year covered by these Financial Statements.