EG Capital’s EG-Economic Empowerment Fund is committed to leveraging sustainable investments to foster economic development, climate adaptation, and gender equity in East Africa and Zambia. Our investment philosophy is rooted in the belief that addressing key societal challenges, such as food security, healthcare, and education, not only drives positive social impact but also enhances long-term financial returns.
Our fund operates within a comprehensive policy framework that integrates sustainability considerations into every stage of the investment process. This framework is guided by international best practices, including the Principles for Responsible Investment (PRI) and the Sustainable Development Goals (SDGs), and is tailored to the unique socio-economic context of the regions in which we operate.
Risk Assessment Process:
Sustainability risks are systematically identified, assessed, and monitored as part of our investment decision-making process. We employ a rigorous due diligence process that evaluates both financial and non-financial factors, including environmental, social, and governance (ESG) criteria. Specific attention is given to understanding the sustainability risks associated with climate change, gender disparities, and socio-economic inequalities in the target regions.
Integration into Investment Analysis:
Sustainability factors are fully integrated into our investment analysis, influencing asset selection, portfolio construction, and risk management strategies. For example, we prioritize investments in companies and projects that contribute to climate resilience, promote gender equality, and enhance access to essential services such as food, healthcare, and education. Our investment thesis is grounded in the belief that addressing these sustainability challenges not only mitigates risks but also creates opportunities for value creation and impact.
Engagement and Stewardship:
We actively engage with investee companies and stakeholders to promote sustainable business practices and drive positive social change. This includes advocating for greater transparency, accountability, and inclusion within the companies we invest in, as well as supporting initiatives that advance gender equality, environmental sustainability, and community development. Our stewardship efforts extend to promoting dialogue and collaboration among industry peers, policymakers, and civil society organizations to address systemic challenges and drive collective action.
Disclosure and Reporting:
Transparency and accountability are fundamental principles of our fund. We are committed to providing clear and comprehensive disclosure on our sustainability performance and impacts, including the environmental, social, and governance (ESG) considerations that inform our investment decisions. Our reporting practices are aligned with international standards, such as the Global Reporting Initiative (GRI) and the Task Force on Climate-related Financial Disclosures (TCFD), and are tailored to meet the specific disclosure requirements of relevant stakeholders, including investors, regulators, and local communities.
Monitoring and Review:
We have established robust mechanisms for monitoring and evaluating the effectiveness of our sustainability risk management processes over time. This includes ongoing monitoring of key performance indicators (KPIs), regular impact assessments, and stakeholder engagement activities to gather feedback and insights. Our commitment to continuous improvement ensures that we remain responsive to emerging sustainability risks and opportunities, and that our investments continue to deliver meaningful social, environmental, and financial returns.
Compliance and Regulation:
We are fully compliant with regulatory requirements and industry standards related to sustainability risk management, including the Sustainable Finance Disclosure Regulation (SFDR) in the European Union. Additionally, we adhere to relevant local regulations and guidelines in East Africa and Zambia, and actively participate in industry initiatives aimed at promoting responsible investment practices and advancing sustainable development goals.
As per the requirements of the Sustainable Finance Disclosure Regulation (SFDR), EG Capital’s EG-Economic Empowerment Fund has undertaken a comprehensive assessment of sustainability risks to evaluate their potential impact on fund returns. This assessment encompasses a holistic analysis of environmental, social, and governance (ESG) factors, guided by the principles of responsible investment and sustainable finance.
Environmental Risks:
The fund recognizes the materiality of environmental risks, particularly those related to climate change and natural resource management. Through rigorous scenario analysis and stress testing, the fund assesses the potential financial implications of physical and transition risks associated with climate change, including extreme weather events, regulatory changes, and carbon pricing mechanisms. By integrating climate-related risks into investment decisions, the fund seeks to identify opportunities for sustainable growth and resilience, thereby mitigating downside risks and enhancing long-term returns.
Social and Governance Risks:
In addition to environmental risks, the fund evaluates a range of social and governance factors that may impact the financial performance of investee companies. Social risks, such as labor practices, human rights violations, and community relations, are assessed to identify potential reputational and operational risks that could affect shareholder value. Governance risks, including board effectiveness, executive compensation, and transparency, are also scrutinized to mitigate the risk of poor decision-making and financial mismanagement.
Gender Equity and Socio-Economic Development:
Furthermore, the fund recognizes the importance of promoting gender equity and socio-economic development as integral components of sustainable investing. By investing in projects and initiatives that empower women and marginalized groups, such as microfinance programs, vocational training centers, and women-owned enterprises, the fund seeks to unlock untapped potential and generate positive social and financial returns. By addressing gender disparities and socio-economic inequalities, the fund contributes to inclusive growth, poverty reduction, and enhanced market opportunities, thereby mitigating social risks and fostering long-term value creation.
Information on principal adverse impacts on sustainability factors is available in the disclosures pursuant to Article 11(2) of the Sustainable Finance Disclosure Regulation (SFDR). As part of our commitment to transparency and accountability, EG Capital’s EG-Economic Empowerment Fund provides clear and reasoned explanations of how adverse impacts on sustainability factors are identified, assessed, and managed within our investment process. Investors and stakeholders can access this information through our disclosure documents, which outline our approach to integrating environmental, social, and governance (ESG) considerations into investment decision-making and reporting activities.
Under SFDR, when a fund has sustainable investment as its objective and no index has been designated as a reference benchmark, the disclosed information must include an explanation of how that objective is to be attained. In this scenario, EG Capital’s EG-Economic Empowerment Fund, with sustainable investment as its primary goal, provides a detailed explanation of its approach to achieving sustainability objectives.
The disclosed information outlines EG-Economic Empowerment Fund’s investment strategy, methodologies, and criteria used to select investments aligned with sustainability goals. It includes a comprehensive overview of the fund’s sustainable investment framework, which integrates environmental, social, and governance (ESG) factors into the investment decision-making process. Additionally, the fund discloses its engagement and stewardship practices aimed at promoting sustainable business practices among investee companies.
By transparently explaining how sustainable investment objectives are to be attained, EG Capital’s EG-Economic Empowerment Fund ensures investors have a clear understanding of its commitment to sustainable finance and the strategies employed to achieve positive environmental and social impacts alongside financial returns.
In conclusion, EG Capital’s EG-Economic Empowerment Fund is committed to assessing and managing sustainability risks in accordance with the requirements of the Sustainable Finance Disclosure Regulation (SFDR). By integrating environmental, social, and governance considerations into investment decisions, the fund seeks to enhance its resilience, competitiveness, and long-term financial performance, while contributing to positive social and environmental outcomes in the regions where it operates.
EG Capital’s EG-Economic Empowerment Fund is dedicated to harnessing the power of sustainable investing to drive positive change in East Africa and Zambia. Through our holistic approach to integrating sustainability risks into investment decisions, we aim to not only generate attractive financial returns for our investors but also to catalyze social and environmental progress in the communities where we operate. We are committed to transparency, accountability, and collaboration in pursuit of our shared vision of a more inclusive, resilient, and sustainable future.
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