INTRODUCTION

In line with our long-term orientation, Avanda constantly analyses the macro environment to identify trends that may impact countries, industries and companies in the longer term. Environmental, social and governance (ESG) issues are an integral part of this analysis as they have the potential to substantially impact progress on a sustainable, long-term basis. Avanda became a signatory of the UN PRI on 16 June 2017 to publicly signal our commitment to integrating ESG considerations into our investment processes. Since 2021, Avanda has also declared its support for the Task Force on Climate-related Financial Disclosures (“TCFD”) and its recommendations.

Avanda has in place a Responsible Investment Framework (“RIF”) which sets out Avanda’s responsible investing efforts and processes for managing ESG risks. The framework also incorporates Avanda’s approach in implementing the MAS Guidelines on Environmental Risk Management.

GOVERNANCE

The Avanda Board sets the tone for and has effective oversight of Avanda’s approach on responsible investing including environmental risk management and disclosures. To spearhead this effort, the Board and senior management have directed the establishment of the ESG Committee to develop the RIF and oversee the integration of environment risk and responsible investment into Avanda’s investment and risk management processes. The ESG Committee reports at least semi-annually to Avanda’s Board on issues relating to ESG risks.

STRATEGY, STEWARDSHIP AND RISK  MANAGEMENT

Our investment teams integrate ESG considerations into their investment process by first identifying ESG factors deemed material to their portfolios, then assessing and reviewing their risks and opportunities along ESG lines using a mix of bespoke and external resources. We also engage with investee companies where necessary to better understand their behaviour on relevant ESG issues and discuss how improvements may be made. Limits are placed on positions in companies whose ESG assessments fall below certain thresholds.

Our risk team uses metrics from a third-party vendor to measure and report the impact of climate transition and physical risks on our funds. These form the basis for us to assess the vulnerability of our funds to climate risks and discuss how to improve the resilience of the funds to those risks.

As the ESG landscape evolves, our ESG investment and risk management processes will continuously be updated to stay relevant with our investors’ needs and requirements.