2016 ANNUAL TPG GES REPORT TABLE OF CONTENTS

FOREWORD FROM TPG LEADERSHIP 3

RESPONSIBLE INVESTORS 4

GLOBAL ENVIRONMENT: GLOBAL BUSINESS 6

SOLUTIONS CAPITAL 7

ASSESSMENT AND IMPACT 8

POWER OF THE NETWORK 10

GOVERNANCE 11

ENVIRONMENTAL 12

SOCIAL 15

EXIT CASE STUDY 17

COMMUNITY 19

FORESIGHT 20

TABLE OF CONTENTS 2 FOREWORD FROM TPG LEADERSHIP

The Dynamic Nature of Sustainability and ESG

Sustainability and ESG is a dynamic element of TPG’s substantial progress in learning how ESG due diligence investment business. Our investment focus spans in the investment process can not only mitigate risk but the globe, and we work on almost every continent also how it can identify opportunities to create value. and in every economic sector. Our world and the We are also working both deeper and more broadly environments, the social contexts, the legal and across our portfolio companies to create greater impact governance systems within which we and our investors and value, not only by reducing costs and improving operate, change constantly and change rapidly. resource efficiencies, but also by increasing our focus Governance is a priority for TPG and, in fact, we on supply chain issues, tapping employee interest and believe “GES” instead of “ESG” is a more appropriate engagement, and responding to increasing customer acronym, thus the title of our report. preferences. Case studies are also included to show how some of the leadership of our portfolio companies, Sustainability and ESG is an important aspect of our have helped to address important environmental or business, and our strong core principles and practices social issues, and contribute to constructive solutions. enable us to address these issues in an integrated way across the Firm. Such decisions are incorporated Looking ahead, we remain focused on our responsibility into our investment decisions through rigorous due to earn a great return for our investors as well as diligence, governance, management and operation of aligning with our investors expressed interests and our portfolio companies. We strive to be systematic to desire to address important issues. We believe that our measure our results and to be transparent. We engage Sustainability and ESG Program plays an essential role in active discussions with our investors and limited in fulfilling that mission. partners to align with their interests in, and perspectives We are deeply committed to the view that investment on, Sustainability and ESG. capital and our ability to deploy it has a critical role We have a dedicated team of professionals who have to play in addressing challenges, needs and human the responsibility to advance these principles and aspirations in vital areas such as education, healthcare, practices within the firm and our portfolio companies. access to capital and economic opportunities, We recognize the value of the embedded wisdom transportation and communications, energy, adequate and experience on Sustainability and ESG and we and clean water, clean air, and waste disposal. We share that knowledge and best practices with all our see a positive opportunity for TPG and our focus on portfolio companies, with whom we are partners on Sustainability and ESG to have an impact on these this initiative. issues, and, as we address these dynamic challenges, we will continue to dedicate and leverage our global This 2016 TPG GES Report highlights the outcome of expertise and network. our activities over the past year. We continue to make

David Bonderman Jim Coulter Jon Winkelried Jonathan Coslet Jack Weingart Jerome Vascellaro Chairman and Co-Chief Executive Officer Co-Chief Executive Officer Chief Investment Managing Partner, Chief Operating Founding Partner and Founding Partner and Partner Officer and Partner TPG Funding Officer and Partner

FOREWORD 3 RESPONSIBLE INVESTORS

Since its founding, TPG has focused on responsible investing through the life cycle of our investments. TPG has dedicated full-time resources to support its long-standing commitment to the Sustainability and ESG Program.

The Firm’s Global Sustainability and ESG Policy (as described below) does not take a one-size-fits all approach. We seek to be opportunistic where ESG initiatives can assist in creating enterprise value.

TPG’s Global Sustainability and ESG Policy Sustainability and ESG Highlights

TPG’s Sustainability and Environmental, Social, and Governance (“ESG”) Program supports the Firm’s long- standing consideration of environmental, health and safety practices in due diligence, investment decisions, and operations. The broad set of Sustainability issues 70 8 (including social and governance issues) have material TPG colleagues that Sustainability sit on non-profit Leadership Council influence on TPG Capital’s assessments of risk, valuation, boards summits held profitability, and opportunity, across the portfolio.

Our focus on Sustainability and ESG issues enables:

• Better investment decisions

• Enhanced results for investors, portfolio 48 90 companies, stakeholders and TPG Sustainability and Portfolio companies ESG Performance engaged on • TPG companies to be better global citizens Self-Assessment Sustainability 3.0 Participants and ESG initiatives

TPG’s commitment is to: • Incorporate Sustainability and ESG considerations into our investment diligence and decisions

• Ensure that Sustainability and ESG practices are implemented and that measurable results 30% 100+ are achieved in our companies and Increase in Annual Members on TPG our operations Self-Assessment Sustainability participants Leadership Counsel • Strive for greater transparency from versus 2014 portfolio company our companies Yammer web portal

PRE-INVESTMENT OWNERSHIP EXIT

RESPONSIBLE INVESTORS 4 RESPONSIBLE INVESTORS

To further our commitment to responsible investment and support the need for greater transparency within the industry, TPG became a signatory to the United Nations-backed Principles for Responsible Investment (PRI) in 2013.

How TPG Aligns with the 6 PRI Principles

We will incorporate ESG issues into investment We will promote acceptance and implementation analysis and decision-making processes of the Principles within the investment industry

• TPG Global Sustainability and ESG Policy • Regular dialogue with limited partners 1 • ESG due diligence and Investment 4 • Working with industry bodies Review Committee • Public speaking engagements • Tools, guidelines and training

We will be active owners and incorporate ESG We will work together to enhance our issues into our ownership policies and practices effectiveness in implementing the Principles

• Dedicated Sustainability and ESG team • Share best practices 2 • Portfolio Company engagement 5 • TPG-led annual conferences and monitoring • PRI Advisory Committee • Annual Sustainability and ESG Performance Self-Assessment

We will seek appropriate disclosure on We will each report on our activities and ESG issues by the entities in which we invest progress towards implementing the Principles

• Establish, measure and report on • PRI framework progress of ESG policies 3 6 • TPG website: external and internal • Report through a TPG portfolio company • Annual GES report work plan and framework

• Public disclosure of information

RESPONSIBLE INVESTORS 5 GLOBAL ENVIRONMENT: GLOBAL BUSINESS

A Truly Global Organization

Our extensive network is comprised of well-established teams and long-term, local relationships around the world. We recognize that the changes in the global environment affect our global business. As we grow and become more diverse, we will continue to ensure that Sustainability and ESG are integrated into all aspects of our Firm’s business and global matters of interest, as highlighted below, are addressed and widely understood.

UK: ESOS, CRC, : MONTREAL: MODERN RESPONSIBLE CARBON PLEDGE SLAVERY ACT SUPPLY CHAIN

USA: THE CLEAN POWER PLAN

PARIS: COP21 TPG AT WORLD : AGREEMENT ECONOMIC RENEWABLES CARBON PLEDGE FORUM IN DAVOS

Shaded areas represent countries in which we have invested Over 475 professionals 17 offices worldwide in 11 countries Over 30 nationalities represented

GLOBAL ENVIRONMENT 6 SOLUTIONS CAPITAL

At TPG, we are investors who provide the capital, expertise, and support our partners need to reach their full potential and create greater possibilities. We believe great investments and great returns come from building true partnerships with the leaders, innovators, and companies in which we invest. Integrated into our overall strategy, is our approach to Sustainability and ESG.

TPG’s Sustainability and ESG – Key Themes and Strategies

Environmental, Social and Sustainability and ESG Governance Due Diligence Portfolio Company Program

Network and Key External Stakeholder Community Building Relationships and Reporting

TPG’s Alternative & Renewable TPG Growth Technologies (ART) growth-equity platform, is Founded in 2007 to specialize in growth equity and dedicated to partnering with companies that deploy middle-market opportunities. As of novel business models and technologies to reduce March 31, 2016, TPG Growth manages more than $7 environmental impact and promote resource efficiency. billion in assets across a variety of sectors including With approximately $250 million in assets under media, technology, and industrials. management as of March 31, 2016, TPG ART looks to help develop companies in multiple sectors, including but not limited to renewable power generation, energy FEATURED efficiency, environmental services, waste management, STORY agriculture, and industrial technologies. Fortune highlights and FEATURED STORY Anuvia TPG’s Satya

SOLUTIONS CAPITAL 7 ASSESSMENT AND IMPACT

The 5 D’S of TPG Diligence

DESCRIPTION DATA DISCUSSION DEBATE DECISION

• What kind of deal • What data do • Have we aired all • Who believes • What is the best is this? we need? important points? what? answer for the firm? • What kind of –– Relevant –– Even-handed –– Pressured company is this? discourse –– All voices heard –– Concise –– Balanced with respect • Thoughtful –– Be prepared for –– Full –– Provocative –– Experiential all outcomes • Balanced Transparency wisdom –– Live with it

Dynamic Elements of our ESG Program While our Sustainability and ESG Program has been in place for many years, our approach and tools remain flexible and dynamic given our firm’s growth and changing market conditions.

An Annual Sustainability and ESG Performance The Investment An ESG Program Summary Self-Assessment Review Committee (IRC) that aggregates our Sustainability consisting of 40 questions, an inclusive body where all and ESG work together during our sent to all portfolio companies persons involved in the investment ownership period in the Sustainability process are invited to participate. Leadership Council ‘SLC’ ESG factors are incorporated into the TPG due diligence process An ESG Workplan which is embedded in the An ESG Framework consisting of 3-4 actionable Investment Review Committee. highlighting leading practices and opportunities to be implemented opportunities for value creation in collaboration during TPG’s ownership period

The Sustainability Leadership Council

made up of representatives of portfolio companies engaged in sustainability CEO and Portfolio Company practices: the function of the council is to enable leaders to Sustainability Awards share best practices, drive results, reduce costs, and identify cross-portfolio opportunities

ASSESSMENT AND IMPACT 8 ASSESSMENT AND IMPACT

TPG’s Sustainability and ESG Performance Self-Assessment and Framework Analysis

A systematic process: as a part of TPG’s Sustainability and ESG Program, portfolio companies are asked to:

• Establish ESG policies

• Participate in the TPG Sustainability and ESG Leadership Council

• Complete an Annual Sustainability and ESG Performance Self-Assessment, Framework Analysis and Workplan

• Measure and report on the progress of their goals and action plans

Through the Sustainability and ESG Performance Self- Assessment and Framework Analysis process, we are able to determine the current state of the program and where we can focus initiatives to drive progress and value.

ANNUAL SELF-ASSESSMENT ESG FRAMEWORK ESG WORK PLAN COMMUNICATION 1 2 3 4 OBJECTIVES

Measure Performance Present Collaborate on Track and Share ESG and Identify Leading Practices 3-4 Actionable Performance and

1 Portfolio Trends and Opportunities Initiatives Lessons Learned

• Third annual • GES Report assessment • Annual conference • 40 questions • PC Webinars in assessment

• 30% increase in INSIGHTS / EXAMPLES respondents since 2014

1. The logos displayed are a few examples of the TPG portfolio companies participating in the Assessment and Framework process. Portfolio companies were selected for non-performance based reasons

Sustainability Assessment Dashboard

The TPG Sustainability Assessment Dashboard integrates portfolio company ESG data populated from the annual self- assessment, alongside financial data and general company statistics.

ASSESSMENT AND IMPACT 9 POWER OF THE NETWORK

Sponsors for Educational Opportunity

TPG LEVERAGE PROCUREMENT

TPG FEATURED HIGHLIGHT

Veterans Initiative Summit TPG served as co-host with , and KKR at a summit in October 2015 to share best practices of veteran hiring programs including those of the following TPG portfolio companies: Taylor Morrison, , Enlivant, Ride, Jonah Energy LLC, and Caesars Entertainment. The Summit convened representatives from the White House, U.S. Military, the U.S. Departments of Labor and Veterans Affairs, private equity portfolio companies, and the U.S. First Lady Michelle Obama, to advocate and advance veteran hiring, retention, and career development.

POWER OF THE NETWORK 10 GOVERNANCE

Governance is a priority for TPG and, in fact, we believe “GES” instead of “ESG” is a more appropriate acronym, as stated by Jim Coulter in his 2014 keynote at the Private Equity International Responsible Investment Forum. Governance is critical during our due diligence phase of investment, to the structure of our investments and in the ongoing management of our portfolio companies.

As part of our annual portfolio company Sustainability and ESG Self-Assessment, we also dedicate a section to Governance. This allows us to understand our portfolio companies’ most important governance issues, determine their levels of transparency and stakeholder engagement, and helps us actively manage risk and opportunity.

“There are two reasons for companies to “If you don’t get the governance operate sustainability. One is economical right, then you don’t even get to – because it can help you reduce costs – really talk about the environmental the other is business ethics – because you and social.” want to do business in a positive way.” Charles Bouaziz Beth Lowery Ontex CEO, 2015 TPG Capital’s ESG Head, 2016

“The way private equity works, with the governance structure, we can push things down into our supply chains – so not just our investments but the entire ecosystem within which we operate. If we do so, the noise we’re making today, which is beginning to permeate the industry, will transform into truly deep impact for years to come – and differentiate the industry as one that cares.“

Jim Coulter: think GES, not ESG TPG Co-CEO and Founding Partner, 2014

GOVERNANCE 11 ENVIRONMENTAL

COLLABORATIVE, GREEN SPACE DESIGN Helping Cushman & Wakefield clients integrate sustainability and creativity into corporate spaces to maximize collaboration and wellness

Energy Foundation Frog Design Recology

Results:

• Supporting a cohesive corporate sustainability strategy • Creative material reusage • Potential impact on strong client relationships • Health and wellness in the workspace

FEATURED HIGHLIGHT Ride’s Ann Fandozzi on Carpooling – Bloomberg

• Transforming employee commuting to a sustainable green solution • Reduced CO2, less waste, lower pollution • Long term vision to change the face of commuting in America – aiming to take 1 million cars off the road

Note: case study examples are TPG portfolio companies. Portfolio companies were selected for non-performance based reasons

ENVIRONMENT 12 ENVIRONMENTAL

PROACTIVELY ENGAGING WITH STAKEHOLDERS Collaborating with governmental officials and NGOs to protect wildlife and reduce emissions while driving business value Results:

• Reduction of fugitive methane emissions from operations

• Wildlife protection and collaboration with the U.S. Department of the Interior, Wyoming, and NGOs – approval of new development plan while protecting sage grouse Jonah’s Paul Ulrich with U.S. Secretary • Investing in local communities and creating resource solutions of the Interior Sally Jewell

HEALTHY PEOPLE, HEALTHY COMMUNITIES, HEALTHY PLANET Using innovation to reduce the corporate footprint, while building and maintaining smart facilities

Results:

• Water: 20% reduction beyond code for clubs

• Energy efficiency: 20% improvement on a per club basis versus 2010 baseline

• 56% reduction in lighting W/sq ft; $2.75M annual savings

• Renewables: solar system installation offsetting 20% electricity load

Note: case study examples are TPG portfolio companies. Portfolio companies were selected for non-performance based reasons

ENVIRONMENT 13 ENVIRONMENTAL

SOLAR STANDARD Integrating solar panels as part of a standard build package for new homes in select communities Results: • Created solar energy relationships with leading solar providers

• Offsetting each new home’s energy usage with renewables, and enabling thousands of dollars of cost savings for each new home buyer • Potential brand differentiation

MAKING RENEWABLE ENERGY MORE AFFORDABLE “One of our Environment Securing Large-scale Generation Certificates (LGCs), and Community Policy under Australia’s Renewable Energy Target commitments is the ‘systematic Results: identification’ investigation, • Solar This Summer Program gives residential customers evaluation and reporting of the option to buy or lease a solar system (between 1kW natural resource reduction and 5kW) at attractive discounts and energy efficiency • Transitioning company towards a lower carbon economy through development of additional retail solar products improvement opportunities.” • Growing business through creating and capturing growth Alinta Sustainability Report opportunities in the Western Australian market 2014-2015 • Development of public sustainability reporting

Note: case study examples are TPG portfolio companies. Portfolio companies were selected for non-performance based reasons

ENVIRONMENT 14 SOCIAL

SHOP, REUSE, REIMAGINE Improving lives through the power of reuse

2015 Results: • Diverted more than 650 million lbs of reusable goods from entering the waste stream • Paid 120 non-profit partners (e.g. Epilepsy Foundation, Big Brothers Big Sisters) more than $140M • Sold quality goods at affordable prices: nearly 96% of retail items sold at Savers stores are under $10 • Published a Community Impact Report

Uber raised over half a million dollars for No Kid Hungry through the app, donated over $200,000 to the American Red Cross to aid disaster relief efforts, and ran hundreds of campaigns in cities across the world – including collecting gently-used clothing for Goodwill, delivering free flu shots with trusted medical partners, and donating time and funds to local charity organizations.

FEATURED HIGHLIGHT Initiative: Social / Philanthropy FIGHTING HUMAN TRAFFICKING Example: Sabre® signature corporate responsibility Sabre’sprogram Passport implemented, to Freedom ‘Passport Program to Freedom’ unites theinitiative travel toand tourismend human industry trafficking. against human trafficking and slavery

Results: • Survivor Scholarships program implemented (new application process re-opened January 2016) • Increase awareness and education through online training course • Advocate for legislation change, and provides opportunities for leaders to collaborate • Collaborating with leading organizations (e.g. Marriott, UNESCO) to educate travelers on human trafficking through Be a Responsible Traveler.

Note: case study examples are TPG portfolio companies. Portfolio companies were selected for non-performance based reasons

SOCIAL 15 SOCIAL

DONATION PARTNERSHIP WITH SAVERS Providing LifeStorage customers the opportunity to donate storage items to Savers nonprofit partners Results:

• Turning costs at LifeStorage into revenue stream at Savers

• LifeStorage customers are given coupons to Savers and donation slips

• Benefits: cost savings; client donation and business differentiator

FOUNDATION AND INGREDIENT TRANSPARENCY

• Non-GMO ingredients; committed to transparency and supports GMO labeling effort 10% • Works with farmers who share its values and sense of community; local sourcing from nearly of total Chobani profits are 900 local farmers from Chenango County, New York, to Twin Falls, Idaho donated to charities through • 10% of profits are donated to the Chobani Foundation; focused on democratizing food and the Chobani Foundation empowering local communities

Note: case study examples are TPG portfolio companies. Portfolio companies were selected for non-performance based reasons

SOCIAL 16 EXIT CASE STUDY

TPG and Ontex management worked together on identifying efficiency opportunities and Ontex identified and shared best practices with TPG’s Sustainability Leadership Council

TPG invests Ontex Ontex Ontex receives ESG Summary¹: in Ontex and adopts first presents at Green Brand Award • More than 90% off fluff underwrote sustainability 2012 TPG - Moltex (diapers) pulp eco-labelled meaningful charter, first Sustainability & Environmental ops occupational Leadership Product • 53% manufacturing plants improvement health Council Development PEFC or 27% FSC chain-of- case and safety Summit, certificate for custody certificates policy and sharing best product life cycle • ‘Lean and Green’ award introduces practices and transparency for commitment to PEFC1 ecolabel goals -‘Serenity’ product reduce CO2 emissions of logistical activities by 20% in from 2013-17

MARCH 2014

JULY 2010

• Multi-site • First plant • Roll out of • ISO 14001 TPG exits the certification to certified to ISO 50001 certification Ontex investment ISO 140012 ISO 500013 certified Istanbul and at an approximate in place energy Ortona plants 50% increase in • Environmental management EBITDA multiple • Environmental Department • First Report under system and approximately policy in place renamed Global Reporting 25% higher Sustainability Initiative guidelines • Introduction of earnings Department FSC ecolabel • Ontex task with broader in place force ranks focus most material sustainability issues

1. PEFC – Sustainable Forest Management Certified 2. ISO 14001 – Environmental & Energy Management systems 3. ISO 50001 – Environmental & Energy Management systems Note: Case study facts publicly available through Ontex Sustainability report

Product innovation, certification, recycling and reduction in energy costs were significant in unlocking value and contributing positively to value creation

EXIT CASE STUDY 17 EXIT CASE STUDY

TPG and management worked together to establish Petco sustainability initiatives and identify leadership opportunities.

TPG invests • VP – • EPA • Founding ESG Summary in Petco and Sustainability ENERGY member • Solar System at Petco San identifies and Energy STAR Pet Industry Diego HQ opportunities manager hired leader; Sustainability for efficiency first LEED1 Coalition • Decrease of energy use of 10.2% • Operational and industry store as a % of sales since 2008 improvements: • Leading role leadership in recycling, • Expanded in Retail • 40% waste diversion rate sustainable logistics, paper water, Sustainability in stores partnerships and packaging waste, Initiative • 100% of coral and live rock and reduction energy, of RILA2 33% of marine species sold in recycle Petco stores are aqua-cultured programs • Named to World’s Most Ethical Companies list 2012-2016

MARCH 2016

DECEMBER 2009

Planet PETCO • 1% for the Planet • 2011 – hosted TPG’s Collaboration TPG exits launched to donating 1% of gross Fourth Annual with WWF4 the Petco offer natural sales from Planet Sustainability bringing together investment products for Petco products to Leadership Council manufacturers, at an the LOHAS3 environmental causes in San Diego HQ retailers, NGO’s and approximate eco-conscious other stakeholders to 19% increase • Growth of natural, • Supply chain customer address pet in EBITDA organic product line – accountability food sustainability multiple integrate consumers audits initiated ESG requirements

1. ‘LEED’ – Leadership in Energy and environmental Design I 2. ‘RILA’ – Retail Industry Leaders Association 3. ‘LOHAS’ – Lifestyle of Health and Sustainability I 4. ‘WWF’ – World Wildlife Fund

Sustainable products, energy efficiency and supply chain focused on natural resource conservation contributed to value creation

EXIT CASE STUDY 18 COMMUNITY

TPG Culture

At TPG, our Founders have created a culture of making long-term value that benefits all stakeholders. Included the right choices, throughout TPG’s investment in our values is a sense of shared responsibilities and cycle and by actively engaging with our portfolio commitment to the environment. As individuals, TPG companies. We make it about personal choices, rather employees serve on several governing and advisory than corporate responsibility, encouraging everyone to boards of local, national and international non-profit become personally involved. organizations dedicated to environmental effort. TPG also provides grant funding to local and national Social Impact is a TPG global initiative focused on nonprofits supporting our employees enabling TPG employees to make a tangible difference active engagement. in their local communities while creating growth and leadership opportunities. At TPG we invest in building

2015 Impacts

Leadership and Engagement Grants Random Acts of Kindness

23 grants in support of 70 boards memberships across the firm, 11 Acts nominated by 15 including organizations focused on: people including:

• Education • Public policy • Myanmar flood disaster • Health • International aid • Nepal earthquake • Social services • Diplomacy • Remembrances of friends • Environmental issues and family of the firm

TPG-in-Action Events

220 participants in volunteer events, examples include:

East Harlem Tutorial Program Care Packages Swords for Plowshares in New York for Troops Care Package Backpacks for Veterans

COMMUNITY 19 FORESIGHT

Following TPG’s 2015 ‘GES’ report, we wanted and framework process. We will strive for this year to provide further information regarding greater transparency though reporting and our Sustainability and ESG program, as well disclosure, including submitting TPG’s annual as highlighting some of the more innovative PRI framework report, along with our own ‘GES’ aspects of our strategy. We hope that this report report. And we will continue to work across the provides you with meaningful insight. TPG’s platforms and geographies.

In 2016, the Sustainability and ESG team TPG is committed to our work within the private continues to work with our Firm’s Leadership equity industry, driving responsible investment to broaden and deepen the integration of the to create measurable business value. We Sustainability and ESG program across TPG understand the importance of Sustainability and Global, as part of the overall Firm strategy ESG for the Firm, for our portfolio companies, and long standing commitment to responsible and for our limited partners. As the industry investing. As the firm continues to grow, we also collaborates on global issues such as climate continue to harness strong internal awareness change, we will also continue to collaborate, through ESG training, document templates, Firm leveraging our knowledge, skill set and global updates, a new sustainability dashboard and network to encourage long-term ESG integration. regular dialogue. As we firmly believe that the richness of the work Looking forward, we will continue to create we do is often best shared through dialogue, ESG value for our investors, through both the the team welcomes the opportunity to further Firm’s and our portfolio companies’ global discuss any of the topics covered in this report. ecosystems. We will continue to proactively “Private equity is nothing but investing with a work with deal teams on ESG due diligence really interesting toolkit…ESG has a special place and with our operating professionals and in the toolkit and has to be absolutely core to leverage procurement team on portfolio what we do.”¹ company sustainability performance and initiatives, through our systematic assessment 1. Jim Coulter, TPG Founding Partner, June 19, 2014, PEI Conference, London

William Reilly Elizabeth Lowery Edward Norton Emily Croft-Baker Kirk Hourdajian

FORESIGHT 20