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This is a summary of the EFG Hermes ESG policy. The information contained here is intended for information purposes only and should not be relied on for completeness.
1.1 Overview
As a leading responsible financial services corporation, EFG Hermes understands that ESG issues can affect investment performance and expose its investment bank to potential investment risks. EFG Hermes believes it is important for its investment professionals to integrate ESG factors within their investment processes.
As a diversified financial institution with a range of services, the implementation of ESG considerations in EFG Hermes varies across its various different business lines. Specific guidelines have been developed for the Private Equity, Asset Management, Investment Banking and Research business lines, due to the significant impact of ESG factors on their activities.
1.2 EFG Hermes’ ESG Guidelines
Private Equity
Private Equity must take ESG factors into account at all stages during the investment cycle, including the initial screening, due diligence, transaction structuring, investment agreements, monitoring, and reporting stages.
All potential investments should be assigned an ESG risk rating after undergoing a risk assessment at the pre-investment screening phase. The ESG rating subsequently determines the level of ESG due diligence and whether external resources are required to support with the process. Projects with high ESG risk rating require independent experts to develop focused impact assessments and mitigation recommendations.
Funds should comply with the investment exclusion list outlined in EFG Hermes’ ESG Policy.
Asset Management
EFG Hermes believes that a proactive focus on ESG factors by companies is one indication of best practice corporate strategy and business model.
EFG Hermes' Asset Management professionals must be proactive in integrating ESG within the due diligence component of the investment process. The analysis of ESG factors by Asset Management professionals is incorporated into the overall risk profile and valuation of prospective investments.
Negative screening via the EFG Hermes Exclusion List is also applied with respect to all potential investments.
Investment Banking
The investment banking team must take into account ESG considerations whenever an ESG issue might have a material impact on the financial performance of its transactions, namely M&A, equity capital markets, and debt capital markets.
Research
The Research business line at EFG Hermes provides macroeconomic, equities and index research with a focus on MENA and frontier markets for clients. The Research team should offer an ESG overview to clients on material ESG risks and opportunities whenever this has an impact on the research analysis decision-making process or the company’s financial/stock performance.
EFG Hermes believes that engagement with investee companies is in line with EFG Hermes’ objective of proactively seeking to manage ESG factors. Divestments rarely lead to changes in the investee companies’ corporate practices, and as such, EFG Hermes will seek to promote responsible business practices by initiating dialogue. Only after engagement dialogues have failed to result in changes in the corporate practices of the investee companies can a decision to divest be undertaken.
EFG Hermes’ investment professionals engage with the company’s management with the aim to understand how companies use their capital and conduct their business, as well as encourage companies to disclose on ESG issues that present a material risk to the company’s financial performance.
In regards to voting practices, EFG Hermes will exercise its ownership rights by voting at company meetings. The voting decision is made with the objective to reduce material ESG risks and what is in line with the best interest of the investors. When voting is sub-contracted, then the respective business line shall encourage the sub-contractor to adopt voting practices that help reduce ESG risks.
In line with the UNPRI requirements for reporting and the Egyptian Exchange (EGX) model guidance for reporting on ESG performance, EFG Hermes aims to be transparent about its ESG activities and will make publicly available the following information: