EFG Hermes understands that as a leading financial services corporation across FEMs, our success as a business is determined not only by our profitability, but also by the impact we have on improving lives in the communities we do business. As a pioneer in sustainability, we believe we have a primary responsibility to lead the market when it comes to initiatives that promote shared value for all. In doing so, we hope to promulgate change in the countries in which we operate by transforming the relationship of corporations with broader society into one that instigates positive change and prosperity.

We have worked hard to integrate sound environmental, social, and governance (ESG) practices into the fabric of our operations and align them with the UN Sustainable Development Goals (SDGs). Since 2011, EFG Hermes has been a member of the UN Global Compact (UNGC) and has worked to ensure policies line up with its 10 principles of human rights, labor, environment and anti-corruption, culminating in our 2017 ESG policy. In 2018, we became the first financial services corporation in Egypt to sign the United Nations Principles for Responsible Investment (UNPRI), an initiative developed by international investors to promote a more sustainable financial system across the globe.

In doing so, we have identified three main pillars of change that can help us achieve optimal levels of impact: responsible investment, corporate social responsibility, and advocacy. Since the launch of our Social Purpose in 2014, we have ensured that our products and services are able to create value for all of our stakeholders, and have directed our investments to resolve global, social, economic, and environmental challenges. Additionally, our business operations are supported by our Corporate Social Responsibility (CSR) department, which spearheads multiple initiatives to curb our environmental footprint as well as the EFG Hermes Foundation for Social Development, which works tirelessly to support vulnerable segments of our society by engaging in projects that contribute to an improvement in their quality of life. EFG Hermes has also undertaken efforts to engage with key stakeholders including peers, policymakers, and regulators to promote good governance and sound corporate practices that promote community welfare.

Responsible Investment Strategies

We have long sought to develop products and make investments that are aligned with our ESG standards and sustainability commitments. As ESG standards become regulatorily mandated in several jurisdictions, investors have become finely attuned to the importance of integrating sustainable initiatives into investment strategies. As such, we organized a two-day ESG advanced training workshop for 27 investment professionals from across our lines of business that sought to highlight responsible investment mechanisms and the ways in which they can be integrated into traditional investment analyses. The workshop cemented the Firm’s commitment to evaluating investment opportunities through the lens of responsibility and long-term value creation for all stakeholders, particularly when it comes to FEM markets where ESG regulations are in their infancy and where the Firm, as a pioneer in this regard, has an established footprint.

Energy

EFG Hermes spearheaded its investments in renewable energy through Vortex in 2014, turning it into the largest renewable energy focused investment manager in Europe. Vortex is directly invested in a 365 MW UK solar PV portfolio with plans to invest in further projects across North America, Europe, and Latin America as it seeks to bolster the renewable energy sector in these regions. Before the divestiture of a 49% stake in a 998 MW pan-European wind energy portfolio, Vortex managed solar and wind assets, deploying c. USD 1.4 billion in the European renewables market.

Healthcare

Given the growing need for high quality, affordable healthcare across Egypt, EFG Hermes Private Equity established Rx Healthcare Management (RxHM). In 2019, RxHM acquired United Pharma, a leading Egyptian provider of medical solutions, to expand its product portfolio to include a number of generic categories in underserved therapeutic areas as well as increase the production of IVs.

Education

EFG Hermes believes education is by large, the cornerstone of sustainable community development. Accordingly, our private equity arm entered into an exclusive partnership with Global Education Management Systems (GEMS), one of the world’s leading providers of private English-language education for students from kindergarten to twelfth grade (K-12) to establish a new USD 300 million platform targeting Egypt’s underserved K-12 education sector. Through this, EFG Hermes Private Equity and GEMs aim to build Egypt’s largest institutional education service provider featuring state-of-the-art educational facilities. As it stands, the platform has an aggregated capacity to serve c. 9,000 students after having signed a deal during the year to acquire an international school in the city of Rehab, bringing the total number of schools under its purview to five. The year also saw the platform gain a majority stake in Option Travel, a leading transportation provider, to offer its current 6,000 students safe and efficient transportation services, with plans to roll the service out to third-party schools down the line.

Financial Inclusion

As part of our underlying commitment to promote sustainable development in our local communities, and in line with our commitment to the SDGs and Egypt’s Vision 2030, EFG Hermes developed a range of products and services aimed at promoting financial inclusion through our rapidly growing NBFI platform EFG Hermes Finance.

Tanmeyah, Egypt’s leading microfinance solutions provider has grown consistently since its acquisition in 2016, with 271 operational branches in 25 governorates serving more than 360,000 clients today. Throughout the year, Tanmeyah worked to enhance its services, upgrading its physical branches as well as adopting a digitalization strategy to streamline exchanges with its clients and properly disseminate information to current and prospective borrowers. Additionally, Tanmeyah now offers micro-insurance and group lending services to provide it with a comprehensive suite of tools to grow their businesses.

During the year, EFG Hermes Leasing increased its SME portfolio to 16% and worked with funders to further enhance its financing options by working to extend low-cost credit to its SME clients. EFG Hermes will also look to merge its newly established factoring business with EFG Hermes Leasing to offer its clients a well-rounded support base as they enhance their operations.

As part of EFG Hermes’ efforts to diversify its range of financing solutions to provide support to a large segment of the population, our subsidiary valU continues to operate its Uber financing program. Launched in 2017 with support from the Saudi Development Fund, the program offers best-in-market vehicle financing programs at an interest rate well below the market average. In doing so, the program aims to remove barriers posed by the cost of purchasing a vehicle to facilitate employment opportunities for individuals seeking to join Uber.

EFG EV, Egypt’s first fintech startup accelerator launched in collaboration with Egypt Ventures, began operations in 2019. The company is expected to invest in more than 30 startups by 2023 to foster innovation among Egypt’s entrepreneurial ecosystem.

EFG Hermes also launched two new ventures during the year, a mortgage finance enterprise as well as an insurance venture, further adding to its ever-growing list of services that will offer clients traditionally left behind when it comes to traditional banking services to access vital capital, support their livelihoods, and bring them into the formal economy.

Sustainable Business Practices

Investing in Human Capital

EFG Hermes constantly strives to invest in its human capital in line with its commitment to the people who keep the Firm running every day. As part of its efforts to create a more open culture and target its investments in its staff capabilities, EFG Hermes launched its first Development Needs Assessment in April 2019, creating an open platform for employees to share their views on the most pressing talent development needs at the Firm. Our HR team works tirelessly to develop programs that will bolster these skills through its learning platform, The Academy. Additionally, ESG training has been incorporated into The Academy to ensure practices are further integrated into all of our operations. For more information on our talent development initiatives, please refer to the Our People section of this report.

Anti-corruption and Corporate Governance

EFG Hermes believes that our success is supported by the importance we attribute to good governance. Robust frameworks incorporating sound ESG practices are what allow us to drive value for stakeholders in a sustainable, ethical manner. Furthermore, our commitment to the UNPRI has resulted in deeper monitoring of our operations and further integration of ESG practices into our operations. This commitment has also led us to develop new policies on climate change as well as on modern slavery and human trafficking to further enhance ethical practices across the Firm.

Corporate Social Responsibility

EFG Hermes’ CSR department is responsible for formulating the Firm’s strategic ESG direction and disseminating it throughout the group. Since its establishment in 2016, the department has worked closely with the Firm’s business lines to further cement the ESG commitments across all operational policies as well to promote awareness among staff members about pressing issues including water conservation, ethical governance practices, and diversity and inclusion in the workplace.

EFG Hermes Foundation for Social Development

The EFG Hermes Foundation for Social Development was established in 2006 to serve as the primary channel through which the Firm seeks to generate positive impact on local communities. The Foundation adopts a sustainable integrated approach which has allowed it to garner support from a number of key partners, further enabling it to affect change.
The Foundation launched a EGP 70 million sustainable integrated development project in 2017 benefiting the Naga’ El Fawal and El Deir villages in the Luxor governorate with the aim of building the former to serve as a developed base for the village’s 75,000 residents.

In late 2019, the Foundation announced the inauguration of the first phase of the project. Key to this phase is the launch of the Young Scholars Academy preschool, which offers 70 children in the area a solid educational and social base as well as a special program catering to 20 children with special needs. Teachers at the preschool have received training in the Montessori philosophy of early education since 2017. The inauguration of the preschool has generated 27 sustainable jobs, including 23 teaching positions for the residents in the area. Additionally, the first phase also saw the completion of a water network set to benefit 10,000 residents in Naga’ El Fawal, and the delivery of the first batch of houses to the residents.

The project’s future phases will include a sanitation and wastewater treatment plant, upgraded housing for all residents, as well as economic empowerment projects benefiting women and youth.

Advocacy

The Firm seeks to regularly engage with an array of key stakeholders including peers, policymakers, and regulators within the community to promote sound ESG policies including good governance, responsible investment, as well as socially and environmentally sustainable practices. Throughout the year, the Firm made use of a number of channels in this regard, including the Firm’s One-on-One conference in Dubai and the London Conference in the UK. Through these now vital FEM conferences, EFG Hermes is able to offer a platform that brings together fund managers, institutional investors, government representatives, and industry leaders to promote partnerships and strategic investments as well as to offer a forum for knowledge sharing between key experts to highlight the opportunities and challenges facing sustainable investment in FEMs.

2020 Outlook

Moving forward, EFG Hermes will continue to build on the strides it has taken to weave sound, ethical, and responsible ESG practices into the fabric of its operations. It will also seek to further engage community stakeholders as it promotes greater action among other industry players to benefit the communities in which it operates and create a platform that will catapult their sustainable and economic development.