Sustainability & ESG

Sector exclusions are applicable to all East Capital Group’s strategies. The exclusions apply on a fund level, to both long and short positions within the equity portfolios, fixed income instruments.

To alert us of suspected breach of international conventions and norms on human rights, labour standards, environment, health and safety or corruption, screening is implemented during analyst's/PM's initial analysis and all our portfolios are monitored continuously and checked quarterly.

To structure our review of relevant and material ESG risks and opportunities we have developed an ESG scorecard, which comprises 10 Red Flag questions and 50+ additional ESG-related questions, as well as an SDG module to ensure that we contribute to UN's Sustainable Development Goals through asset allocation. As the scorecards are filled in by research analysts, portfolio managers and portfolio advisors, we ensure that the entire investment team integrates relevant and materials risks and opportunities in their fundamental analysis, ensuring a more holistic analysis of company quality.

If, in East Capital Group's  opinion, a portfolio company does not manage ESG factors in a satisfactory fashion, we evaluate if it is suitable to initiate a dialogue with the company. The different channels and methods which East Capital Group can use in that event, include:

• Discussions with management and executive boards during company visits and other meetings
• Annual letters to all portfolio companies in which East Capital identifies important issues for the coming year
• Nomination of, or support for, independent members of the board
• Use of voting rights at general meetings
• Collaborating with other shareholders and taking part in relevant stakeholder and investment associations
• Dialogue with governments, stock exchanges and financial regulators to promote improvements in the institutional and legal framework

East Capital Financial Services AB considers principal adverse impacts for sustainability factors as defined in article 2 p. 24 in the European Parliament and Council Regulation 2019/2088 regarding sustainability related disclosures in the financial services sector (“SFDR”). Sustainability factors refer to environmental, social and employee matters, respect for human rights, anti-corruption and anti-bribery matters.

 East Capital Financial Services AB has chosen to consider the principal adverse impacts of sustainability factors in the context of investment advice and insurance advice by obtaining relevant information on the funds on which advisors make recommendations. East Capital Financial Services AB prioritizes the principal adverse impacts on sustainability factors in no particular order. Instead, how the indicators are prioritized in the advisory process depends on the client's potential sustainability preferences related to these factors. Thus, the ranking or prioritization of indicators in the advisory process is determined by the client's sustainability preferences.

East Capital Financial Services AB is aware that data quality and data availability is still deficient with regard to the sustainability factors listed in Table 1 of Delegated Regulation 2022/1288 of the SFDR. Furthermore, the information provided by financial market participants is in many cases based on lagging data. 

Against this background, East Capital Financial Services AB has not established any criteria or thresholds linked to the sustainability indicators, as it is not certain that the data purchased from sustainability data providers is reliable.