Corporate Social Responsibility

As a leading house of impact promoting positive change and creating shared value, EFG Hermes Holding has made it a long-standing mission to instigate change across the markets in which it operates, paving the way for increasingly sus- tainable business practices. The unprecedented challenges that continue to impose pressure on the globe following the onset of the COVID-19 pandemic demonstrate the importance and the interconnectivity of social issues and the pivotal role that businesses play in creating an inclusive and sustainable society. As such, EFG Hermes Holding continues to honor its commitment to empowering and improving the lives of people in the communities in which it operates, consistent- ly leveraging responsible investment strategies and infusing its operations with sustainability across the Group.

Since 2011, EFG Hermes Holding has been mak- ing strides to integrate environmental, social and governance (ESG) considerations into all aspects of its operations. The Firm seeks to align its development frameworks with the best international standards and practices, such as the United Nations’ 17 Sustainable Development Goals (SDGs). The Group has also been an active member of the United Nations Global Compact (UNGC) since 2011, integrating its internal policies with the 10 principles of human rights, labor, the environment, and anti-corruption, as well as with Egypt’s Vision 2030.

As part and parcel of its efforts to weave sus- tainability across its operations, EFG Hermes Holding launched its Social Purpose in 2014 to ensure that all of the Firm’s product and service offerings are able to generate value for stakeholders, and to overcome global, social, economic, and environmental challenges. This was further supported by the issuance of the Firm’s ESG policy in 2017, which was developed to align EFG Hermes Holding’s operations with sound and ethical practices. The Firm’s Corpo- rate Social Responsibility (CSR) department is responsible for spearheading key initiatives to ensure the implementation of ESG practices, in addition to overseeing the work of the EFG Hermes Foundation for Social Development, which aims to support underprivileged mem- bers of the community. The EFG Hermes Foun- dation for Social Development aims to do this through collaborating with policymakers and partners on projects that promote sustainable development and economic growth.

In 2018, the Firm marked the major milestone of becoming the first financial services corpora- tion in Egypt to commit to the United Nations Principles for responsible Investment (UNPRI), an international initiative developed by inves- tors seeking to promote sustainable finance and a more inclusive financial system across the globe. Another milestone was in October 2020, when EFG Hermes Holding was featured among 30 regional companies in Refinitiv and the Arab Federation of Exchanges’ Low Carbon Select Index, which aims to provide investors with access to low-carbon equities in the MENA region. These achievements align with the Firm’s strategy to build integrated sustainable business operations and take on initiatives that create sustainable value for stakeholders.

A constituent element of the Firm’s efforts to integrate ESG policies across the Group is the deployment of responsible investment strate- gies, which includes defining and developing clear objectives, policies, and practices that promote positive change and create social and environmental impact. In alignment with this, EFG Hermes Holding integrates ESG across all its lines of business and core functions, working closely with the Group’s investment profession- als to account for the accurate determination of appropriate risks and opportunities across its operational footprint.

EFG Hermes Holding continues to prioritize investments in sectors that not only generate fi- nancial returns but also create massive impact. The Firm’s substantial portfolio of responsible investments encompasses integral initiatives that fall in line with the UN SDGs, with a strong focus on key sectors, such as education, renew- able energy, and healthcare. On the renewables front, the Firm manages a number of invest- ments in the renewable energy sector through its private equity platform Vortex Energy. Since its inception, Vortex Energy has deployed, man- aged, and harvested capital across three fund vehicles—Vortex I, II, and III—focusing on ef- ficient portfolio management and maximizing its environmental and social impact. The three fund vehicles boasted a remarkable portfolio of renewable energy generation projects with a total net capacity of 822MW. During the holding period, Vortex Energy delivered 4.6 terawatt hours (TWh) of clean energy, which reduced ap- proximately 4.5 million metric tons of carbon di- oxide equivalent (MTCO2e), all while optimizing the operational and financial performance of these assets. These renewable energy projects align with the best industrial practices that aim to enhance operational efficiency, delivering 1.4TWh of clean energy on an annual basis. In 2021, Vortex IV—Vortex Energy’s flagship fund and fourth investment vehicle—concluded the first close of USD 200 million, which was an- chored by EFG Hermes and several Abu Dhabi- based sovereign institutional investors and family offices, among others. In the course of its first year, it seeded its first investment to ac- quire a stake of 49% in Ignis—a leading Spanish player in the renewable energy landscape—to establish a clean energy platform to be built in the next year. Through this acquisition, Vortex IV is to inject over EUR 625 million into Ignis through a series of capital injections in order to fund its high growth plans for a >20 GW plat- form and to transform it into a fully integrated renewable IPP in Spain and other countries. The platform will construct, hold, and operate approximately 7.5 GW of renewable energy gen- eration projects in Europe, the UK, and the US alongside a pipeline of 15 GW of projects in the same geographies that are developed for third parties. The environmental and social impact of Vortex Energy is set to rise exponentially, as the fund’s first investment alone will represent approximately 5x net capacity versus the sum of all previous platforms since inception. Vortex Energy’s investment in Ignis also supports the direct creation of jobs within the company, which is expected to grow by 50% from the current level in the short term, decreasing sub- sequently but ramping up Y-o-Y in the long term.

At year-end 2021, Vortex Energy was awarded the EMEA Renewables and Energy Transition Solar Deal of the Year at the IJInvestor Awards 2021, reflecting the platform’s solid work toward the shared goal of sustainable development and its efforts toward a net-zero future.

As the Firm deems education a key pillar to a country’s economic development, the Private Equity division formed an exclusive partnership in 2018 with Global Education Management Systems (GEMS) Education, one of the world’s leading providers of private English-language education for students from kindergarten to twelfth grade (K-12). Together, they established the EFG Hermes Egypt Education Fund (EEF), a USD 200 million platform which focuses on Egypt’s underserved K-12 sector. A year later, the EEF acquired a majority stake in leading transport provider, Option Travel, to provide a high quality and competitive student transpor- tation service to students enrolled in GEMS Education’s schools.

At present, the EEF’s portfolio consists of ten schools at various stages of development with a combined capacity of c. 20,000 students, and it offers superior education services to over 9,000 students. In 2021 specifically, EEF began ex- panding its portfolio to house more reputable in- stitutions, concluding the acquisition of Al Hayah International Academy, one of Egypt’s leading education providers. Additionally, the Sovereign Fund of Egypt (TSFE) and EFG Hermes’ Private Equity division signed a memorandum of under- standing (MoU) during the year to launch two premium national schools in West of Cairo. The schools are to be built over 30,000 sqm with a combined capacity of 5,000 students.

On the healthcare front, EFG Hermes’ Private Equity division operates Rx Healthcare Manage- ment (RxHM), which manages investments in the healthcare sector in order to increase the avail- ability of premium healthcare products and ser- vices across the region. The platform’s investment approach centers around providing growth capital through investing in controlling stakes (and on a selective basis, in controlled minority stakes). RxHM places a high value on ESG due diligence, with target investments having to combine both financial viability and ESG criteria fulfilment to ensure sustainable value add that fills a tangible healthcare gap in underserved areas.

The platform’s recent acquisition of leading Egyptian medical solutions provider, United Pharma, through Nutritius Investment Holdings, attracted significant interest from prominent investors, with proceeds being used to expand the company’s product offering to cover essen- tial categories in underserved therapeutic areas and ramp up production for existing products. United Pharma, Egypt’s leading player in the injectables space, has an established track record of supplying medical products to the Egyptian local market and various export mar- kets in Africa and the Middle East. In 2021, RxHM began deploying strategies to further enhance the operational scope of its healthcare platform with United Pharma, as the importance of medi- cal services and hospital essentials continue to grow in demand, particularly after the onset of the COVID-19 pandemic.

In addition to its responsible investments through its Private Equity division, EFG Hermes Holding operates a rapidly growing NBFI plat- form, EFG Hermes Finance, which has devel- oped a range of products and services aimed at promoting financial inclusion through its subsidiaries: Tanmeyah for microfinance, valU for BNPL fintech services, PayTabs Egypt for digital payments, Bedaya for mortgage finance, Kaf for insurance services, and EFG Hermes Corp-Solutions for leasing and factoring servic- es. Additionally, the Firm also operates Egypt’s leading fintech startup accelerator EFG EV Fintech. Through these activities, EFG Hermes Holding aims to guarantee that each and every one of its activities are capable of generating positive stakeholder impact.

EFG Hermes Holding disseminates updates through regular reports on its progress in the ESG space, including the UNGC Communication on Progress, UNPRI Transparency Report, and the Firm’s own annual sustainability report. In 2020, the Firm was named Sustainability Champion by the Egyptian Financial Regulatory Authority’s (FRA) first publication, recognizing players championing sustainable development in the non-bank financial service industry. The Firm was also recognized as a Community Honoree in the Global Finance Out- standing Crisis Leadership 2020 Awards.

As part and parcel of its commitment to ensuring that sustainability remains at the center of the Firm’s operations, EFG Hermes Holding’s CSR department has launched initiatives to promote sustainability and social development practices among its employees. In alignment with this, the Firm has appointed policies to conserve energy by reducing electricity usage, minimize and manage waste, and bolster efficiency across its entire supply chain. Additionally, the Firm has partnered with Thomson Reuters to offer a myriad of e-learning materials during the year to introduce CSR and ESG Investigation courses and certifications. The Firm also regu- larly engages with stakeholders through social media campaigns to promote awareness on key sustainability matters and a deeper understand- ing of the UN SDGs.

In 2021, the Firm’s Board of Directors, CSR department, and business line representatives came together to issue an updated Group-wide ESG Policy. The updated policy addresses key issues, such as ESG guidelines for the Firm’s business lines, stewardship and engagement, exclusionary criteria, capacity building, and reporting. Additionally, EFG Hermes Holding issued an array of policies and statements that define the Firm’s proactive approach to human rights, the environment, anti-corruption, and other critical ESG-related issues.

Established in 2006, The EFG Hermes Foundation for Social Development leverages a personal approach to development, where projects and initiatives are only taken on if they can sustainably improve lives, both in the short-term and the long-term. Since its establishment, the Foundation has adopted a sustainable integrated development approach that focuses on maximizing impact and generating returns on investment of scarce development funds. Partnerships are an integral component of the Foundation’s social development framework, and each project brings together partners from both the public and private sectors, donors, and civil society in synergies that create measurable impact for individuals and communities at large.

Launched in 2017 under the EFG Hermes Foundation for Social Development, the EGP 70 million Naga’ El Fawal and El Deir Village Integrated Development Project works in alignment with the UN SDGs to develop and revamp the rural communities of the Luxor governorate. The project aims to build a developed base in order to revitalize the local economy and serve the village’s 75,000 residents, marking the Foundation’s third integrated development project in Upper Egypt following its success with similar projects in Ezbet Yacoub village in Beni Sweif and Al Makhzan village in Qena. Over the years, the project has had a number of achievements in the development of Naga’ El Fawal, including the renovation of a health unit in the village and the establishment of a water treatment plant. Additionally, the project has also contributed to the rebuilding of 94 houses, offering residential units to each of the village’s families with a long-term goal to eliminate rural co-living.

One of the key pillars to the project’s scope has been the development of a fully equipped community center, including a Montessori preschool, a center catering to children with disabilities, and a training facility, all of which are powered by solar energy. The Young Scholars Academy preschool seeks to offer quality education to the village’s 150 children as well as the necessary social skills, laying the foundation for them to continue their education. The preschool also features a dedicated section to provide the village’s 50 children with special needs with the necessary support to advance their learning and prepare them for enrolment into public schools in the future. At the Young Scholars Academy, training is on-going for 75 current and potential staff members to build their capacity and raise the standard of service provided to the enrolled children. In 2021, 17 young scholars graduated from the academy, including 4 scholars from the Special Needs Section.

2021 was another year of turbulence, as the world continued to witness new COVID-19 variants emerging. Recognizing the adversities faced by many people as the world continues to navigate the crisis, EFG Hermes Holding continued to provide the necessary support for its employees, in addition to leveraging its Foundation for Social Development to aid the most at-risk members of society. The Firm’s Human Resources (HR) department continued to provide support to its personnel, by re-engineering its programs and offerings to facilitate working from home. Above and beyond, EFG Hermes Holding introduced more flexible work policies, equipped offices with the necessary healthcare supplies for COVID-19 emergencies, and conducted mental resilience sessions for employees.

Going forward, EFG Hermes Holding aims to continue building on the foundation it has laid, and leveraging its successful track record in the journey towards sustainable development. As a fully integrated financial services provider with presence in 13 markets across four continents, EFG Hermes Holding is fully aware of the significant ethical responsibility it has towards its shareholders and towards society. In alignment with this, the Firm will continue prioritizing and integrating responsible ESG practices across its operational footprint, with an eye for becoming a wholly sustainable enterprise. The Group will continue engaging key stakeholders and forming partnerships across the value chain to catapult greater action and generate maximum impact. As the importance of responsible investing continues to grow on a global scale, the Firm will seek to further focus its efforts on expanding the reach of its programs, deepening the integration of ESG practices into its operations, as well as working diligently to mitigate risks in order to generate shared value for all stakeholders and promote sustainability and prosperity across the board.