To our stakeholders:

I am pleased to confirm that East Capital Group reaffirms its support of the Ten Principles of the United Nations Global Compact in the areas of Human Rights, Labour, Environment and Anti-Corruption.

In this annual Communication on Progress, we describe our actions to continually improve the integration of the Global Compact and its principles into our business strategy, culture and daily operations. We also commit to sharing this information with our stakeholders upon request.

In 2022 we completed for the first time two reports: a Sustainability Disclosure as well as Diversity, Equity and Inclusion disclosure. We do not track short-term absenteeism as a metric. In 2022 we had one instance of sick leave longer than 30 days, which corresponds to 2% of the whole staff. Our full time staff of 66 people represents 20 different nationalities.

We engage with our portfolio holdings on behalf of our funds on a variety of material environmental, social and governance risks. Most of our strategies are classified as Article 8 funds under the Sustainable Finance Disclosure Regulation (SFDR), which promote environmental and social characteristics. Besides we manage two funds classified as Article 9 funds under the Sustainable Finance Disclosure Regulation (SFDR), meaning that sustainability is an investment objective, with a minimum proportion of sustainable investment of 90%.

Sincerely yours,

Per Elcar
CEO

We have our own workplace policy, which is reviewed annually and approved by the Board of Directors of East Capital Holding, which states zero tolerance with regard to harassment, abuse or threats. Our procurement and supply chain policy states similar requirements for our value chain.

Through our equity shareholdings and bond investments in portfolio holdings in our funds and mandates, as well as an owner and developer of properties in our real estate funds, we strive to act as a responsible long-term owner. East Capital Group is a UN PRI signatory since 2012 and we have introduced several processes such as:
- Excluding companies with product or/and service involvement in the manufacturing or distribution of weapons
- Screening for human rights violations, through the use of an external service provider which analyses controversies related to breaches of the 10 principles of the UNGC and OECD guidelines for multinational companies, and through internal research and monitoring
- Integrating risk analysis on social aspects, including human rights, in our pre-investment and in our monitoring tools
- Engaging with companies on supply chain management, enquiring about and monitoring human rights violations
- Ensuring no social harm under the Sustainable Finance Disclosure Regulation (SFDR), including analysis, disclosure, and monitoring of social Principal Adverse Indicators

The above processes are part of our sustainable investment framework which is monitored on a quarterly basis and reported internally to the Investment Committee and Board of Directors. We also report on these topics to external stakeholders, on an annual basis, to the UN PRI, through our sustainable investment report and our own sustainability disclosure.

During 2022, we signed up to Advance, the new UN PRI initiative on human rights and have been confirmed as participant for a Chinese portfolio holding in the materials and mining sector. We also engaged with a Korean auto-maker involved in allegations related to child labour in their value chain in the US. We have not made any additional investments in Russia following the invasion of Ukraine.

Our own staff gender diversity looks as following:

Male Female
Board of Directors (East Capital Holding) 66% 33%
Executive management 73% 27%
Non-executive management 75% 25%
Investment professionals 81% 19%
Other employees 67% 33%

We have our own workplace policy, which is reviewed annually and approved by the Board of Directors of East Capital Holding, which ensures that we do not participate in any form of forced or bonded labour, comply with minimum wage standards and that employment-related decisions are based on relevant and objective criteria. Our procurement and supply chain policy states similar requirements for our value chain.

Through our equity shareholdings and bond investments in portfolio holdings in our funds and mandates, as well as an owner and developer of properties in our real estate funds, we strive to act as a responsible long-term owner. East Capital Group is a UN PRI signatory since 2012 and we have introduced several processes such as:
- Screening for labour rights violations, through the use of an external service provider which analyses controversies related to breaches of the 10 principles of the UNGC and OECD guidelines for multinational companies, and through internal research and monitoring
- Integrating risk analysis on social aspects including labour rights in our pre-investment and monitoring tools
- Engaging with companies on supply chain management, enquiring about and monitoring labour rights violations
- Ensuring no social harm under the Sustainable Finance Disclosure Regulation (SFDR), including analysis, disclosure and monitoring of social Principal Adverse Indicators
The above processes are part of our sustainable investment framework which is monitored on a quarterly basis and reported internally to the Investment Committees and Board of Directors. We also report on these topics to external stakeholders, on an annual basis, to the UN PRI, through our sustainable investment report and our own sustainability disclosure.

During 2022, we completed for the first time a Diversity, Equity and Inclusion report for our own organisation.

We engaged with Chinese companies with operation in Xinjiang Uighur Autonomous Region to ensure that they are not, either directly or in their value chain, exposed to forced labour.

Our internal policy states that we shall have a workplace and work procedures which reduce the carbon footprint of our operation and its employees, such as limiting air transportation, using public transportation, electric vehicles and locally sourced products. Our offices are CO2 neutral. Our procurement and supply chain policy states that our suppliers shall strive to reduce their consumption of energy, water, and other resources.

We are aware that our financed emissions, i.e. emissions generated by the companies of which we are a shareholder or a bondholder are significant and we have established a responsible investment framework which addresses these risks, such as:
- Our Climate Change Policy and Biodiversity Policy which are part of our ESG Policy
- Our Investor Climate Action Plan, introduced and approved by the Board of Directors in 2022
- Participation in the Finance Sector Deforestation Action and Investors Policy Dialogue on Deforestation
- Participation in the annual non-disclosure campaign of CDP
-

In 2022, we filed in our Net Zero targets for Espiria, our fund brand investing in global and Nordic markets (commitment to join the Net Zero Asset Managers Initiative in 2021 at COP26, targets submitted in October 2022.

Other important features how we monitor and evaluate environmental performance:
- Excluding companies with product or/and service involvement in the extraction or distribution of fossil fuel, in most of our portfolios
- Ensuring no environmental harm under the Sustainable Finance Disclosure Regulation (SFDR), including analysis, disclosure and monitoring of environmental Principal Adverse Indicators
- Screening for environmental violations, through the use of an external service provider which analyses controversies related to breaches of the 10 principles of the UNGC and OECD guidelines for multinational companies, and through internal research and monitoring
- ESG integration – risks and opportunities related to environmental issues are an integral part of our ESG analysis and stewardship efforts

Our internal policies state that we shall have a workplace and work procedures with zero tolerance to bribery and corruption; we have a whistleblowing function. Our procurement and supply chain policy states similar requirements for our value chain.

We assess corruption risks as part of our ESG integration work throughout our portfolios. Anti-corruption and ethical behaviour are criteria under the Sustainable Finance Disclosure Regulation (SFDR), and under scope for analysis, disclosure and monitoring of related Principal Adverse Indicators.

Upon identifying risks, we will engage with portfolio holdings to assess the scope and nature of these risks, request disclosure and measures to rectify. During 2022 we have had a dialogue with one Korean holding whose management has been accused of bribery and unethical behaviour.