Gemway Assets, Sustainable Investors in emerging markets

1 - Our vision in a few words

“To be aligned with company management teams and support them in their quest for a sustainable growth”

“ A sustainable performance”

Our Environmental, Social and Governance approach is part of our risk management, to which we are increasingly adding an impact approach As stock-pickers, we have always attached great importance to corporate governance. Through shareholder dialogue, we aim at improving the ESG commitment of our investee companies. According to Gemway Assets founder Bruno Vanier, governance quality has been his primary stock selection criterion for over 30 years. Since 2014/2015, Gemway Assets has structured a complete ESG investment approach with the definition of an ESG investment policy, the signature of UN-PRI, the CDP membership (formerly Carbon Disclosure Project) and the selection of both Sustainalytics as a supplier of extra-financial data, and S&P Trucost for carbon footprint calculation. Our entire equity fund range has obtained the SRI official label.

Gemway Assets SFDR

Gemway Assets Voting Policy 2020

Gemway ESG Investment Policy

Transparency Code Gemway Assets 2021

Exclusion Policy

2 - ESG investment policy and internal rating system

At Gemway, we are known to be close to Emerging Markets companies. Every year, we conduct more than 300 corporate management interviews. Each month, a member of our investment team travels to an emerging country for one or two weeks. Each corporate interview includes an ESG moment (questionnaire and proprietary analysis framework). Having this level of intimacy with our investee companies allows us to give them an honest ESG rating.

“Although we rely on specialized data providers such as Sustainalytics or S&P Trucost, we believe a thorough in-house analysis is necessary”.

While we primarily rely on Sustainalytics ESG data for all our investment universe (#1,200 companies), we do in-house analysis and issue a Gemway ESG rating on all our investee companies. Our proprietary analysis framework is based on Sustainalytics ESG rating matrix where all risk sub-scores (30 to 50 depending on the sector/country) are computed by us.

Our internal rating is made of 6 risk categories: LOW; MODERATE, MEDIUM; MEDIUM PLUS; HIGH; SEVERE. From risks rated “HIGH”, we put the company on watch list and engage in a more active shareholder dialogue with its management team. From “SEVERE”, we commit to sell the position within 3 months.

ESG investment case: Longi Green by Gemway Assets

China based Longi Green Energy Technology (Longi) is the largest solar panel manufacturer in the world. Quality of its ESG report is well above sector average. Longi has adopted the Global Reporting Initiative standards since 2018 and has integrated the United Nations Sustainable Development Goals (SDGs) into its strategic planning. In 2020, five of its factories in China have started to run on 100% renewable energy. The same year, the company has officially joined the RE100 initiative led by The Climate Group. Longi aims at achieving 100% renewable energy use in its global operations by 2028.

In addition, as the undisputed leader in the photovoltaic industry, it significantly contributes to China's carbon neutrality. Therefore, we assign a product impact bonus to Longi ESG Risk score.

The final score is 21.8/100, which is a MODERATE risk.

Breakdown of the main ESG risks identified for the company

3 - IMPACT (Sustainable Development Goals/ODD)

The Sustainable Development Goals are part of our ESG rating. Positive impact companies are rewarded with a bonus.

4 - Our commitment and shareholder dialogue

We have been a UN-PRI* and CDP** signatory since 2015.

On top of our own ESG analysis, we have always relied on both independent research houses Sustainalytics for the measurement of various risks and S&P Trucost for the calculation of environmental factors. The latter also helps us calculate our funds’ total carbon footprint and trajectory.

In addition to regular corporate interviews, we are also committed to vote at a minimum of 50% of our investee company AGMs. In 2020, our voting participation was 71%. Finally, 11% of resolutions were voted "AGAINST".

*PRI: We also participate in group actions within the framework of UN-PRI, whenever issue concerning companies in our investment universe seems important to us in terms of our ESG commitments.

**CDP: an environmental association that campaigns for greater transparency in the publication of corporate carbon data. Being partners means we are committed to promoting corporate transparency.

Example of shareholder dialogue: Proya

Proya is a Chinese cosmetics company. In 2020, the company has substantially improved its ESG communication by publishing a sophisticated sustainability report in both Chinese and English. In 2021, we have communicated with this company through several email exchanges and a virtual meeting to better understand its ESG approach. We have used a questionnaire and the Gemway Assets ESG analysis grid. During the survey, we discovered that carbon footprint measurement was incorrect. Management has promised to correct this error in its next ESG report. In addition, we have informed our environmental data provider Trucost of this error. The company consulted us on how to improve its ESG approach and what data they should commit to provide to the market. Work with a third-party consultant has been recommended. We hope to see further progress in the future and will keep our investors informed.

5 - Further ESG development

Since February 2020, Gemway Assets has carried out several structural projects, including the SRI labeling of our equity funds.

All our three equity funds (GemEquity, GemAsia and GemChina) are now SRI labelled. All our range also are SFDR Article 8 compliant.

Gemway believes in the potential of emerging market debt.