Integrating environmental, social and governance (ESG) factors into the investment process has become common over the years, but a crucial and missing component within this is corporate culture. Whilst there is strong evidence showing that ESG leaders outperform their peers, we believe that companies with strong corporate cultures provide an additional driver of outperformance in the long term. This factsheet captures the state of the Mobius Emerging Markets Fund’s portfolio at the end of Q2 2022 across four dimensions environmental, social, governance, and culture.
In Q2 2022, we continued to actively engage with our portfolio companies through the use of video conferencing. The Portfolio Highlights section below displays some of the progress observed during the quarter.
• Persistent Systems published its first Sustainability and ESG report with long term ESG targets in June.
• SINBON Electronics announced that they will target a reduction of 40% in their carbon footprint by 2030.
• The overall portfolio score for “reporting on Sustainable Development Goals” increased to 60%.
• Parade Technologies and EC Healthcare have started publishing their contribution to the UN Sustainable Development Goals.
• In June, Parade Technologies elected their first female independent board member named Laura Huang.
• eMemory Technology won the COMPUTEX 2022 Best Choice Award for their PUF security solutions.
• EPAM Systems was certified as a Most Loved Workspace for the second consecutive year.
• Safaricom was ranked as the best company to work for in Kenya in the LinkedIn 2022 Top Companies Ranking.
1. The engagement breakdown is for Q2 2022 and is based on 149 engagements in the fields of environment, social, governance, culture and operations and capital allocation issues.
2. As part of the ESG+C®assessment, four different dimensions are assessed: environmental: entails factors like climate change, natural resources, pollution & waste as well as environmental opportunities; social: refers to factors such as human capital, product liability and social opportunities; governance: refers to the reporting methods, the ownership structure as well as checks and balances; culture: contains factors like the degree of freedom, equality, recruitment, innovation and remuneration.
3. Portfolio companies are assessed on a binary basis whether they do or do not comply with the assessed metric. The number of companies complying with the metric is expressed as a percentage of the portfolio.
4. External CDP Score: The Carbon Disclosure Project increases environmental transparency and accountability of companies and enables progress tracking. The scoring ranges from A, A to B, B to C, C to D, D and F.
5. Sustainable Development Goals: Out of the 15 portfolio companies reporting on the united nations sustainable development goals, the top 3 goals are selected.
6. The determined company percentages are weighted according to their weight in the portfolio. The weighted average is reported as a percentage of the portfolio.
7. Founder--/Family owned Companies: Reports the percentage of portfolio companies with the family or founder holding 5% or more.
8. Blockinvestor: Refers to an individual or organization owning a substantial amount of the company’s shares. The hurdle rate is set at 15%.
9. Dedicated Investor Relations Professional: Reports companies as a percentage of the portfolio having appointed an employee responsible for investor relations.
10. External Glassdoor Score: Glassdoor is one of the world’s largest job and recruiting sites providing scores for companies ranging from 0 to 5. The Portfolio score is the average of 22 available scores among the portfolio.
11. Dedicated Sustainability Professional: Reports companies as a percentage of the portfolio having a dedicated employee in charge of the company’s sustainability activities.