1. Introduction

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

The objective of this statement is to bring leading practice in integrating ESG risks into Tanmeyah’s   operations and business practices  . This will enable Tanmeyah to lead by example amongst its peers by maintaining the highest standard of care in its approach.

2. Overview

As a responsible and leading microfinance institution, Tanmeyah Microfinance recognizes that ESG (Environmental, Social, and Governance) issues can impact financial performance and expose the Firm to potential risks. Tanmeyah believes it is crucial for its professionals to integrate ESG factors into their processes.

Given Tanmeyah's diverse range of financial services, the implementation of ESG considerations may vary. Specific guidelines apply to different business practices   as outlined in the guidelines below. ESG guidelines for certain transactional services have not been prescribed due to the nature of these services and the limited ability to influence ESG outcomes directly. As part of the ongoing review of ESG factors, Tanmeyah will monitor these guidelines to ensure they reflect exposure to ESG risks and opportunities, as well as industry best practices.

 

3. ESG Guidelines for Tanmeyah

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.

4. Capacity Building

Training on sustainability, including ESG factors, should be provided to all Tanmeyah Microfinance staff across all business lines and supporting functions on an annual basis. Additional advanced training, focusing on ESG integration, should be offered to select professionals. The Human Resources department should be informed of the nominated staff. Tanmeyah should allocate financial resources to support the training initiatives and ensure that all employees comply with the scheduled training sessions.

 

5. Reporting

In line with the Egyptian Financial Regulatory Authority’s Mandatory ESG and Climate Disclosure Regulation, Tanmeyah aims to be transparent about its ESG activities and will make publicly available the following information:

• The Tanmeyah ESG Statement; and
• Disclosures on Tanmeyah ESG integration efforts on an annual basis within the EFG Holding Group sustainability report.

6. Community Engagement

At Tanmeyah Microfinance, giving back to the community is an inherent part of our culture. Both the Firm as a whole and our team members individually have professional and personal stakes in the wellbeing of our communities. Tanmeyah demonstrates its commitment not only through its professional support of local business and economic growth, but also through its financial and in-kind sponsorship of various organizations, youth activities, and non-profits.

Tanmeyah Microfinance actively engage with the communities we operate in, supporting local initiatives and contributing to social development projects that align with community needs in light of Tanmeyah’s and EFG Holding Group community engagement strategy.

7. Exclusionary Criteria

Tanmeyah criteria seek to screen out operations and business practices 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 Authorities[1],
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:
• hazardous chemicals, pharmaceuticals, pesticides and wastes,[2]
• ozone depleting substances;[3]
• endangered or protected wildlife or wildlife products;[4] and
• 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 materials;[5] or
• Gambling, gaming casinos and equivalent enterprises (5%)
• Adult entertainment including prostitution and pornography.
• Coal Mining (30%)[6]

8. ESG Consideration

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 Tanmeyah may consider, where material and relevant to the companies assessed for potential investment.

Environmental	Social	Corporate Governance
Climate change policy and strategy Ecosystems, biodiversity, and habitat protection Environmental impact and related risks Energy consumption and efficiency Greenhouse gas emissions Pollution to air, land and/or water Waste management and recycling Water management	Community relations and support Customer satisfaction Employee training and development Employee compensation and benefits Health, safety and wellbeing Human rights Labour standards and practice Product/services responsibility and innovation Staff recruitment and retention Supply chain management Transparency and accountability	Accounting and disclosure Auditor independence Board structure and independence Business ethics and integrity Compensation and remuneration policies Data protection and privacy Management protocols Government relations Risk management Shareholder rights Transparency and accountability

 

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[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.

[2] As specified in the 2004 Stockholm Convention on Persistent Organic Pollutants (“POPs”), see www.pops.int; the 2004 Rotterdam Convention on the Prior Informed Consent Procedure for Certain Hazardous Chemicals and Pesticides in International Trade, see www.pic.int; the 1992 Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal, see www.basel.int and WHO Recommended Classification of Pesticides by Hazard Class Ia (extremely hazardous); or Ib (highly hazardous) www.who.int/ipcs/publications/pesticides_hazard/en/; as may be amended from time to time.

[3] As specified in the 1999 Montreal Protocol on Substances that Deplete the Ozone Layer, see www.ozone.unep.org, as may be amended from time to time

[4] As covered in the 1975 Convention on International Trade in Endangered Species or Wild Flora and Fauna (“CITES”), see www.cites.org, as may be amended from time to time.

[5] This 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