East Capital Global Emerging Markets ex China - H2 2025 Impact Report

This report outlines the Principal Adverse Impact (“PAI”) indicators according to the EU’s Sustainable Finance Disclosure Regulation (SFDR) for East Capital Global Emerging Markets ex China and highlights the key metrics used to assess the fund’s investee companies’ impact on the environment and society.

• Our fund’s GHG intensity is 79% below the benchmark. We do not invest in fossil fuel companies and would typically not invest in companies with a GHG intensity considerably higher than their peers.
• Our funds have no, or very low, exposure to negative biodiversity impact / hazardous waste, and we would not invest in high-risk companies as this would be misaligned with the SDGs. We are early adopters of the TFND and actively engage with portfolio holdings within Nature Action 100 initiative.
• Due to the lack of data on the gender pay gap (only 2% coverage) in our universe, we focus on board gender diversity. This remains a topic on which we often engage with our holdings. Read more here.
• As a Deforestation Investor Group member (DIG, formerly Financial Sector Deforestation Action), we map deforestation risks in our portfolio and engage with high-risk companies on deforestation issues.

Carbon intensity versus benchmark

• While the data in the table on the first page is largely sourced from an external provider, we also calculate fund carbon intensity ourselves based on reported Scope 1 and 2 emissions in our internal database (i.e. we include emissions of companies that may not be picked up by data providers).
• Data coverage has increased dramatically in recent years, to the extent that only a handful of companies (around 5%) that have not yet reported emissions, largely because they have recently been listed and have not yet implemented reporting systems. This is partly due to regulation (particularly in India), but also to engagement efforts from investors like ourselves.

SDG impact

• We assess SDG impact using a proprietary tool, the details of which are explained in this PRI case study.
• East Capital SDG VCA (value chain analysis): This tool looks across the value chain of each company to identify the two most material SDGs for that company’s value chain. The tool gives a score ranging from -100 to 100, based on current impact and a 3–5 year outlook. Impact is assessed based on materiality, intentionality, additionality and criticality.
• We currently estimate that 25% of the fund has a strong positive impact on one or more SDGs. As we require a score of above 25 (“weak positive impact”) for inclusion in the portfolio, all of of our companies have a positive impact on at least one SDG.

Case studies

SDG 1: No poverty

Gentera is the leading microfinance institution in Mexico and Peru, providing financial services to underserved segments in the region. They have been the gateway, providing more than 13 million people with access to the financial system.

SDG 4: Quality education

Laureate Education is the largest provider of private universities in Mexico, with 47% of its 470,000 annual students being first generation. In 2024, the company provided USD 485 million in scholarships and discounts.

SDG 7: Affordable and clean energy

Cenergy is a Greek company which controls 60% of the inter-array market (cables that connect offshore wind projects), as well as manufacturing a wide range of other cables. The company has SBTi targets for all its subsidiaries and strong ESG metrics.

SDG 11: Sustainable cities and communities

Aldar Properties is one of the UAE’s largest real estate developers, with SBTi‑approved near‑term emissions‑reduction targets covering Scope 1, 2 and 3. On a like‑for‑like basis, before the expansion of reporting boundaries in 2024, Aldar achieved a 7% reduction in Scope 3 emissions between 2021 and 2023. The company continues to advance its energy transition and maintained a share of over 30% renewable‑energy in its latest reporting cycle.

SDG 12: Responsible consumption and production

Converge, the Philippines largest broadband provider, reduced its network GHG intensity by 39% between 2022 and 2024 (from 2.3 to 1.4 tCO2e per petabyte) while sourcing 35% of its power from renewable energy in 2024. The company is targeting a 75% reduction in Scope 2 emissions by 2030.

Stewardship

• During 2025, we voted at 14 out of the total 15 shareholder meetings (93%) for our Global Emerging Markets Sustainable Fund (the ex China fund launched in August 2025). In 22 meetings (31%), we voted against some items.
• We voted against items that are not aligned with our voting policy, part of our ESG policy, such as insufficient gender diversity at board level or overly long auditor tenure.

Case study: Sustainability themes driving alpha

In H2 2025, we were one of only two foreign investors to participate in the IPO of Indian recycling company Jain Resources. The stock returned us 78%, generating 41bps of alpha in Q4 25. We also visited the company’s operating facilities in Chennai to assess the management of its operations, particularly given the limited ESG disclosure following its recent IPO.

Business model and sustainability impact

The company is a diversified recycling business focussing on metals such as copper, lead and aluminium. Recycling copper uses up to 85% less energy than mining it, while recycling aluminium uses up to 95% less energy.

Regulatory tailwinds and industry formalisation

Recycling can have a harmful impact on the environment and on workers, which is why the Indian government has moved to formalise the industry. This is a trend that Jain is benefiting from. For example, the Extended Producer Responsibility (EPR) Act requires battery OEMs to use an increasing proportion of certified recycled lead. Jain is one of the few companies able to provide this.

Site visit: E&S management

During our site visit, we inspected the lead recycling units, which use automated battery breakers.These fully enclosed machines crush batteries and automatically separate lead, plastic and acid, thereby removing workers’ exposure to hazardous materials. The company also operates a zero-discharge policy, meaning that even the plastic is recycled rather than stored. In addition, the use of scrubbers ensures that any air leaving the smelting unit passes through a series of treated filters that trap lead dust and neutralise acidic gases (SOx) before they reach the atmosphere. We therefore left satisfied that the company was adequately managing its environmental and social footprint.

Definition of sustainable investment

At East Capital, ESG analysis is carried out by the Portfolio Managers and Analysts covering the companies, using robust proprietary tools, such as the East Capital ESG scorecard and the East Capital SDG VCA. The analysis is then reviewed by the ESG team.

• We classify “sustainable investment” using three binding elements that leverage the results of these proprietary tools. These elements are outlined below.
• As of 30 December 2025, we assess that 98.0% of the fund was classified as sustainable. 
• The remaining 2% of the fund was cash, which we maintain for liquidity reasons.
  
  

1. Sector based and norms-based screening
   I. Companies with >5% of their revenues from fossil fuels, weapons, tobacco, gambling, pornography and alcohol;
   II. We also use a third-party provider to check for breaches of UN Global Compact.
   
   

2. SDG VCA tool of at least 25
   I. This ensures companies have a net positive impact on the SDGs
   
   

3. Company is classified as sustainable as per our “three step test”

   I. Contribution to E and/or S	>60% score in E&S section of ESG scorecard.
   II. No significant harm to E or S	No red flags related to E&S issues and compliance in screening.
   III. Good governance practices	>60% in G section of ESG scorecard and no more than 2 red flags related to G.

¹ MSCI Emerging Markets Index. No specific index has been designated as a reference benchmark for the purpose of attaining environmental or social objectives.

² We do not report data for the benchmark because this is an absolute measure that is related to the size of the fund, i.e. owning 1% of a company with 100 tonnes of Scope 1 emissions would result in 1 tonne of Scope 1 emissions attributable to the fund.

³ While coverage by the data provider is below 100%, our investment and screening processes imply full portfolio coverage on this parameter.