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Environmental, Social and Governance Policy Summary

1. Introduction

  1. 1.1 Objective
    1. EFG Holding believes that integrating ESG considerations into its investment processes enhances business and financial performance over the medium and long-term. It assists investment professionals in reducing exposure to non-financial risks, and therefore enhancing risk-adjusted returns.

    2. The objective of this Policy is to bring leading practice in integrating ESG risks into EFG Holding’s day-to-day operations and investment practices. This will enable EFG Holding to lead by example amongst its peers by maintaining the highest standard of care in its investment approach.

    3. EFG Holding is a signatory to the UNPRI, and as such is committed to act in accordance with the following Principles:
      • Principle 1: We will incorporate ESG issues into investment analysis and decision-making processes.
      • Principle 2: We will be active owners and incorporate ESG issues into our ownership policies and practices.
      • Principle 3: We will seek appropriate disclosure on ESG issues by the entities in which we invest.
      • Principle 4: We will promote acceptance and implementation of the principles within the investment industry.
      • Principle 5: We will work together to enhance our effectiveness in implementing the principles.
      • Principle 6: We will each report on our activities and progress towards implementing the principles.
  2. 1.2 Background
    1. EFG Holding is a trailblazing financial institution with a universal bank in Egypt and the leading investment bank franchise in frontier and emerging markets that offers diverse investment banking services including securities brokerage, investment banking, asset management and private equity.

      As responsible investment is part of EFG Holding’s corporate strategy, EFG Holding is committed to integrating Environmental, Social and Governance principles into its investment approach and practice, wherever applicable.

Commonly adopted frameworks and publications such as the IFC performance standards, the UNPRI, the UNGC and the ICGN were consulted during the development of this Policy.

2. Governance and Compliance

  1. 2.1 Policy scope
    1. This Policy applies to all investments made and/or managed by EFG Holding and all investment related services and activities across public and private markets and in all geographic locations. The Policy must be applied in coordination with other EFG Holding’s existing policies and procedures.

  2. 2.2 Governance, approval and responsibility of this Policy
    1. The CSR department is the owner of the ESG Policy and is responsible for distributing the Policy to all EFG Holding's employees and other relevant stakeholders. The CSR department should ensure that the Policy is updated to reflect changes in business priorities at the corporate level. The Policy should be reviewed on an annual basis or, as and when required, whichever occurs earlier.

    2. The Board of EFG Holding is responsible for the approval of this policy, and for approving any updates or changes to this Policy. This Policy is valid until withdrawn by the Board.

    3. The Executive Committee is tasked with the implementation of this Policy across EFG Holding, and to ensure the effective development and continuous improvement of this Policy.

    4. The Risk & Compliance departments, in collaboration with Internal Audit, are responsible for enforcing this Policy and related procedures as well as implementing independent control processes. Every business line in scope of the Policy should identify ways to integrate ESG considerations into its day-to-day operations. Tools & procedures should be updated to reflect the integration of ESG analysis and industry best practice.

    5. The degree of ESG integration within business lines will be considered during performance appraisals of respective department heads by the senior management of EFG Holding.

    6. This publicly-available policy is complemented by its corresponding EFG Holding-internal version, which contains additional information on document control, definitions and certain internal administrative procedures and responsibilities.

  3. 2.3 Regulatory compliance
    1. EFG Holding’s operations extend from Egypt to the Middle East, Africa, Asia, Europe and North America. EFG Holding is committed to complying with applicable laws and regulations covering environmental impacts, labor rights, social issues and corporate governance, nationally and globally. In case of conflict between the legal framework and the requirements of this Policy, the legal framework in which EFG Holding operates prevails.

    2. Since ESG requirements continuously evolve over time, EFG Holding monitors ESG requirements from relevant laws, regulations, and standards in the jurisdictions where it operates. The CSR department should hold a record of all applicable ESG requirements that are relevant to EFG Holding’s operations. Responsibility for the continuous monitoring of ESG-related laws and regulations that affect EFG Holding’s operations rests with the relevant business partner department within EFG Holding.

3. ESG guidelines for business lines

  1. 3.1 Overview
    1. As a responsible premiere financial services corporation, EFG Holding understands that ESG issues can affect investment performance and expose the bank to potential investment risks.
      EFG Holding believes it is important for its investment professionals to integrate ESG factors within their investment processes.

    2. Appendix E of this Policy includes a non-exhaustive list of ESG considerations that may be relevant to investment professionals as they undertake ESG risk assessments as part of their investment screening purposes. As a diversified financial institution with a range of investment services, the implementation of ESG considerations in EFG Holding may vary and specific guidelines apply to the Private Equity, Asset Management, Investment Banking and Research business lines,
      as outlined in Section 6.2. ESG guidelines for the Security Brokerage business line have not been prescribed due to the transactional nature of the services provided and the limited practical ability to influence decisions concerned with ESG practices and outcomes of underlying transactions. As part of the ongoing review of this Policy, EFG Holding will monitor these guidelines to ensure they reflect exposure to ESG risks and opportunities and industry best practice.
  2. 3.2 EFG Hermes’ ESG Guidelines
    1. 3.2.1 Private Equity
      1. 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.
        To allow for an effective and consistent identification and management of material risks and opportunities, while providing the flexibility to concentrate on what matters most to individual deal or investee company, EFG Hermes has developed an ESG Framework of common areas. All potential investments shall go through a rigorous review in two phases. The first phase is a screening against the Exclusionary Criteria (Appendix D).
        A fund’s capital must not be invested in any activity deemed illegal under the applicable local laws and regulations nor any activity that is banned by international agreements. The second phase involves a risk review against the ESG framework as part of the due diligence process, where support from external specialist firms may be sought.
        All potential investments are assigned an ESG risk rating. This helps the Private Equity team to develop an informed opinion as to whether to proceed with the investment, and if so how to structure the transaction and what improvements may need to be implemented post acquisition.
        EFG Hermes investment professionals shall be proactive in integrating ESG within investee companies by assisting the companies in developing mitigation plans to address their material ESG related risks and opportunities. As and when appropriate, the Private Equity team should encourage investee companies to enhance their sustainability performance using frameworks and management systems outlined in Appendix B and C.
        The ESG practices and performance of all investee companies are monitored annually. The outcomes help inform further areas of engagement and improvement and enable the Private Equity team to share best practice across the portfolio. In cases where EFG Hermes has limited ability to control the integration of ESG factors in investee companies, or in circumstances where it is a minority shareholder, the fund manager, to the best of its ability, should encourage portfolio companies to consider relevant ESG-related principles. Every investee company’s annual expenditure plan should allocate financial resources to support the implementation of ESG in the investment process, using appropriate means such as staff training and development, or consultation with external specialists.
    2. 3.2.2 Asset Management
      1. EFG Hermes believes that a proactive focus on material ESG factors by companies is an indication of best practice corporate strategy and business model. On this basis, EFG Hermes considers the approach taken by current and prospective investment entities on their material ESG factors as part of the overall analysis for potential investment, and ongoing valuation. This is in line with the EFG Hermes Asset Management business line’s objective of achieving long term capital appreciation and effectively managing downside risks and opportunities.
        EFG Hermes Asset Management professionals must be proactive in integrating ESG within the due diligence component of the investment process. This applies to EFG Hermes’ bottom-up investment approach in which the fundamental analysis of industries is complemented with analysis of ESG considerations, as well as the top-down approach where investment professionals should include ESG factors in their analysis of countries and/or regions. The analysis of ESG factors by Asset Management professionals should be incorporated into the overall risk profile and valuation of prospective investments.
        ESG analysis revolves around EFG Hermes’ proprietary evaluation methodology, which includes tailored scorecards for each of our key investment sectors. Information is collated through a combination of primary research and engagement with the current or potential investee company. The resulting ESG score is considered as part of the investment decision, and informs future engagement focus and proxy voting, should an investment be made.
        Every fund’s annual expenditure plan should allocate financial resources to support the implementation of ESG in the investment process, using appropriate means such as staff training and development, or consultation with external specialists. Negative screening via the exclusion list set out in Appendix D should also be applied with respect to all potential investments.
    3. 3.2.3 Investment Banking
      1. The investment banking team seeks to take into account ESG considerations whenever an ESG issue may have a material impact on the financial performance of its advised transactions, both buy and sell side; as we believe this is in the best interest of our clients.
        In the first instance, ESG issues form part of the Know Your Client (KYC) process we carry out for any new client, which also covers screening against EFG Hermes Exclusionary Criteria (Appendix D).
        When advising on transactions, the investment banking professionals utilise a proprietary framework of critical questions and best practice guidance to identify and carry out an assessment of material ESG considerations, on a sector-by-sector basis. The outcomes of the assessment help determine relevant ESG risks and opportunities which are incorporated into the overall transaction documentation.
        Expenditure plans should allocate financial resources to support the implementation of ESG in investment banking, using appropriate means such as staff training and development, or consultation with external specialists.
    4. 3.2.4 Research
      1. The Research team at EFG Hermes provides macroeconomic, equities and index research with a focus on MENA and frontier markets for clients. This business line offers a tailored ESG overview to clients on material ESG risks and opportunities wherever these have a financially material impact on the research analysis decision-making process or the company’s financial/stock performance. Evaluation of material ESG risks and opportunities is carried out using EFG Hermes’ proprietary ESG research methodology across key sectors.
        This research includes, but is not limited to, ESG considerations, outlined in Appendix E, which are utilised to guide the research team’s analysis on ESG aspects.
        Expenditure plans should allocate financial resources to support ESG capability development in the Research business line, using appropriate means such as staff training and development, or consultation with external specialists.
    5. 3.2.5 EFG Finance
      1. EFG Finance is the NBFI platform for EFG Holding. Through EFG Finance, the firm brings clients a portfolio of non-bank financial institutions (NBFI) including, factoring, financial leasing, microfinance, mortgage, insurance and payments, and consumer finance. EFG Finance owns three subsidiaries: Corp-Solutions, Tanmeyah Microfinance, and valU Consumer Finance, for which ESG guidelines are provided below.

      2. EFG Finance also has a stake in four other businesses: Paytabs, Bedaya Mortgage, Tokyo Marine Insurance, and EFG-EV Fintech. These are excluded from the EFG Holding ESG Policy as they are affiliates and not subsidiaries.

      3. EFG Finance should adopt the ESG guidelines of EFG Holding related to pursuing investments where it is important for its investment professionals to integrate ESG factors within their investment processes. This includes across its lending practices as well as incorporation of ESG factors across direct investments in corporate entities or start-ups, including fin-tech. This should be incorporated into written policy, including credit and risk policies, where possible to ensure potential investments are screened and assessed against material ESG risks.

      4. EFG Finance should apply the negative screening via the exclusion list set out in Appendix D to all investments. The annual expenditure plan should allocate financial resources to support the incorporation of ESG factors across factoring and leasing services, using appropriate means such as staff training and development, or consultation with external specialists.
    6. 3.2.6 EFG Corp-Solutions
      1. EFG Corp-Solutions provides leasing and factoring services that can be combined in customized packages designed to provide optimal financing and leveraged to provide critical funds for sustainable investments including sustainable waste management and low emission transportation.

      2. In line with the primary goals of EFG Corp-Solutions’ credit function, the EFG Corp-Solutions team should take into account material ESG issues in the extension of credit, in any form, as part of prudent risk management.

      3. Both Leasing and Factoring services should incorporate ESG factors across the credit approach and policy, ensuring that sustainability performance information is fully integrated into the credit decision making process. Leasing and Factoring business lines should apply negative screening via the exclusion list set out in Appendix D to all potential investments. Within the initial screening process for Leasing and Factoring services, ESG factors should be integrated into the application process where relevant and analysed by the credit analysts.

      4. Within Factoring services, internal risk rating models should take into account ESG considerations when evaluating the profile of potential customers, in order to enable the credit analysis process to determine suitability of the proposed transaction with an eye towards ESG risk. As part of the Factoring Approval package presented to various management levels for approval of a Factoring service, ESG risks should be clearly presented and included in the Approval Memorandum for adequate consideration in the decision making process. Customer reporting should involve monitoring of material ESG risks, as determined by the screening process, where appropriate. Material ESG risks should be monitored and reviewed within the Risk Management team and the Credit & Risk Management, Managing and Business Development Directors.
        Within Leasing services, ESG considerations should be incorporated into the credit scoring matrix. The Credit Approval Memo should outline any material ESG risks for consideration by various management levels in the lease approval process. Risk Management policies should include material ESG exposure risk in evaluating EFG Corp-Solutions’ underlying asset exposure.

      5. Corp-Solutions’ annual expenditure plan should allocate financial resources to support the incorporation of ESG factors across factoring and leasing services, using appropriate means such as staff training and development, or consultation with external specialists.
    7. 3.2.7 Fintech Lifestyle Enabling Solution (valU)
      1. Consumer Finance provides credit to consumers for personal or household use through valU, MENA’s leading lifestyle enabling fintech platform. valU's team should actively manage ESG risks associated with consumer credit products. Consumer Finance should include ESG considerations in their progressive credit and risk policy as well as in their lending practices, taking into consideration material ESG issues in the merchant approval process as well as in the credit risk general policy and under-writing process for consumers. This will ensure that the risks inherent in the business are identified, defined, measured, monitored, and controlled in accordance with EFG Holding’s overall ESG policy.

      2. Consumer Finance should apply negative screening via the exclusion list set out in Appendix D to all retail partners.
        Consumer Finance’s annual expenditure plan should allocate financial resources to support the implementation of ESG in the investment process, using appropriate means such as staff training and development, or consultation with external specialists.
    8. 3.2.8 Microfinance (Tanmeyah)
      1. Tanmeyah Microenterprise Services provides microfinance solutions to lower-income, small and micro enterprise owners with limited access to capital. Due to the smaller scale of operations of underlying services and borrowers, Microfinance should ensure that their approach to engaging and managing ESG aspects is commensurate to the capacity and scale of the micro-businesses/borrowers in question and the associated material ESG risks. ESG risks should be incorporated into the Risk Management System Policies, including their review in the applied procedures before awarding a loan to a client, within field visits and as part of operation risks reviewed and identified for ongoing monitoring. Negative screening via the exclusion list set out in Appendix D should be applied with respect to all potential investments. Material ESG risks should be considered in the vetting and approval process for borrowers.
        Microfinance’s annual expenditure plan should allocate financial resources to support ESG capability development within Tanmeyah, using appropriate means such as staff training and development, or consultation with external specialists.

4. Stewardship and Engagement

EFG Holding sees engagement with investee companies as a key aspect of ESG integration as it enables the proactive management of ESG factors. It is through supportive and constructive dialogue with the management of investee companies that EFG Holding can exercise its stewardship responsibilities and encourage organisational change where warranted. We continually seek to exercise the highest standards of stewardship across all our investment activity and as such we draw on internationally accepted best practice principles, including of the revised UK Stewardship Code (2020), to guide our approach.

EFG Holding believes that our investment professionals are in the best position to evaluate the potential impact that ESG issues or the outcome of a given proposal will have on long-term shareholder value. As such, responsibility for our engagement activities rests with our investment professionals, and they are fully integrated into our investment processes. Thus, our engagements focus on issues that could have a material financial impact with priority given to the largest holdings of a particular strategy and/or investments facing a material ESG concern, as determined by investment professionals and the outcomes of the respective ESG Scorecard.

In regard to voting practices, EFG Holding will exercise its ownership rights by voting at company meetings. The voting decision is made with the objective to reduce material ESG risks while protecting the best interest of 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.

5. Capacity building

Training on sustainability, including ESG factors, should be provided to all EFG Holding staff, across all business lines and supporting functions on an annual basis.
Additional advanced training, with a focus on ESG integration, should be provided to select investment professionals.

6. Reporting

In line with the UNPRI requirements for reporting and the Egyptian Exchange (EGX) model guidance for reporting on ESG performance, EFG Holding aims to be transparent about its ESG activities and will make publicly available the following information:

  • The EFG Holding Public ESG Policy; and
  • Disclosures on EFG Holding ESG integration efforts on an annual basis in the EFG Holding sustainability report.


Appendix A: ESG Policy governance framework

As part of EFG Holding’s commitment to the successful integration of this ESG Policy, an ESG governance framework has been developed. The ESG Policy’s governance framework is summarised below.

ESG Policy approver Board of Directors
  • Approval of ESG Policy
  • Approval of updates to the ESG Policy
  • Amend, revoke and/or supplement resolutions passed by the Executive Committee
ESG Policy owner CSR department
  • Owner of ESG Policy with responsibility to communicate Policy throughout EFG Holding
ESG Policy implementation Executive Committee
  • Identify ESG matters that affect the operations of EFG Holding
  • Ongoing monitoring of ESG integration throughout EFG Holding
  • Pass ESG resolutions, and suggest updates to the ESG Policy for Board approval as necessary

Appendix B: Applicable sustainability frameworks for ESG integration

An overview on the sustainability frameworks that can be adopted to improve sustainability performance is provided below. This list is only indicative and not comprehensive. It shall be updated regularly by the CSR department.

Sustainability framework Purpose
BREEAM Building Research Establishment Environmental Assessment Methodology
BS 8903 Guide for sustainable supply chain and procurement
Carbon Disclosure Project A voluntary based organisation and mechanism to help organisations report on their carbon emissions and develop mitigation strategies
Equator Principles A risk management framework for financial institutions to assist in the assessment of environmental and social risks of project financing
Global Sustainability Assessment System (GSAS) Green building certification system developed by the Gulf Cooperative Council
GRI Standards GRI is an international independent organisation that helps businesses, governments and other organizations understand and communicate the impact of business on critical sustainability issues such as climate change, human rights, corruption and many others
Integrated Reporting A concept for institutional reporting that combines financial with non-financial (i.e. environmental, social and governance) disclosures
LEED Leadership in Energy & Environmental Design
Sustainable Development Goals UN-sponsored set of 17 aspirational sustainable development goals developed to provide guidance to UN members, the private sector and non-governmental organisations
SSEI Peer-to-peer learning platform to explore how exchanges, in collaboration with investors, regulators, companies can improve corporate transparency and performance on ESG investment
UNGC United Nations initiative to encourage businesses to adopt universal sustainability principles in the areas of human rights, labour, the environment and anti-corruption
UNPRI UN-backed framework for investors to assist in the implementation of responsible investment criteria in investment decision making

Appendix C: Applicable management systems for ESG integration

An overview on the management systems that can be adopted to improve sustainability performance is provided below. This list is only indicative and not comprehensive. It shall be updated regularly by the CSR department.

ISO 9001 Quality Management System ISO
ISO 14001 Environmental Management Systems
ISO 50001 Energy Management ISO
OHSAS Occupational Health and Safety Management Systems

Appendix D: Exclusionary criteria

EFG Holding‘s Exclusion criteria seek to screen investments on three levels:

  1. Country Exclusion: exclude investing in companies that are registered in and/or derive more than 30% of total revenue from activities in countries that are subject to sanctions i.e. economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by one or more Sanctions Authorities1 ,
  2. Company Exclusion: exclude companies that have a history of persistent and serious violations of one or more Principles of the U.N. Global Compact and have not implemented any measures to reduce the risks for further violations. For companies that fall under this criterion, we review their practices as part of our annual universe screening and would allow a company to become part of the investment universe should we see significant progress towards rectifying the original instances that excluded them in the first instance, and
  3. Sector or activity Exclusion: exclude investments in certain sectors based on their substantial long-term ESG tail-risks and our internal standards as a responsible investor. Unless specifically noted in terms of revenue threshold (in parentheses), these sectors are automatically excluded from our investment universe:
    • Production or distribution of alcoholic beverages (5%);
    • Production of, or trade in, any product or activity deemed illegal under applicable local or national laws or regulations or subject to internationally agreed phase-outs or bans as defined in global conventions and agreements such as certain:
      1. hazardous chemicals, pharmaceuticals, pesticides and wastes2,
      2. ozone depleting substances3;
      3. endangered or protected wildlife or wildlife products4; and
      4. unsustainable fishing methods such as blast fishing and drift net fishing in the marine environment using nets in excess of 2.5 kilometres in length;
    • Production of, or trade in, arms including but not limited to cluster munitions, anti-personnel mines, biological weapons, chemical weapons, depleted uranium munitions and non-detectable fragments, incendiary and blinding weapons, primarily designated for military purposes;
    • Production of, use of, or trade in, unbonded asbestos fibres. This does not apply to purchase and use of bonded asbestos cement sheeting where the asbestos content is less than 20%.;
    • Production of, or trade in, radioactive materials5; or
    • Gambling, gaming casinos and equivalent enterprises (5%)
    • Adult entertainment including prostitution and pornography.
    • Coal Mining (30%)6

Appendix E: ESG Considerations

ESG factors and issues may vary significantly between different companies, industry sectors, and geographical regions. The following non-exhaustive list provides some examples of potential ESG issues that EFG Holding may consider, where material and relevant to the companies assessed for potential investment.

Climate change policy and strategy Community relations and support Accounting and disclosure
Ecosystems, biodiversity, and habitat protection Customer satisfaction Auditor independence
Environmental impact and related risks Employee training and development Board structure and independence
Energy consumption and efficiency Employee compensation and benefits Business ethics and integrity
Greenhouse gas emissions Health, safety and wellbeing Compensation and remuneration policies
Pollution to air, land and/or water Human rights Data protection and privacy
Pollution to air, land and/or water Labour standards and practice Management protocols
Waste management and recycling Product/services responsibility and innovation Government relations
Water management Staff recruitment and retention Risk management
Supply chain management Shareholder rights
Transparency and accountability Transparency and accountability
1 Sanctions Authority could be and not limited to the U.S. Govt, U.N. Security Council, European Union and the U.K. Treasury. Our Fixed Income strategies may deploy additional country exclusion criteria based on the Fund for Peace’s Fragile State Index.
2As specified in the 2004 Stockholm Convention on Persistent Organic Pollutants (“POPs”), see; the 2004 Rotterdam Convention on the Prior Informed Consent Procedure for Certain Hazardous Chemicals and Pesticides in International Trade, see; the 1992 Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal, see and WHO Recommended Classification of Pesticides by Hazard Class Ia (extremely hazardous); or Ib (highly hazardous); as may be amended from time to time.
3As specified in the 1999 Montreal Protocol on Substances that Deplete the Ozone Layer, see, as may be amended from time to time
4As covered in the 1975 Convention on International Trade in Endangered Species or Wild Flora and Fauna (“CITES”), see, as may be amended from time to time.
5This does not apply to purchase of medical equipment, quality control (measurement) equipment and any equipment in which the radioactive source could reasonably be considered to be trivial or adequately shielded.
6 Exclude all companies that derive more than 30% of their revenues from coal mining