ESG is integrated throughout our investment processes.
ESG risks and opportunities are assessed on a deal-by-deal basis depending on the type of business, sector and location. Investment professionals use an in-house due diligence toolkit which is based on the Sustainability Accounting Standards Board (“SASB”) framework to flag the material ESG issues and the Task Force on Climate Related Financial Disclosures (“TCFD”) framework to identify climate related issues. Where necessary, Affinity would hire external consultants to conduct thorough due diligence. ESG risks, opportunities and action plans are incorporated into investment memos which are considered at Investment Committee meetings.
Investment professionals will work closely with management of the portfolio companies to implement the ESG initiatives that have been identified in the due diligence process. At the portfolio companies, the investment professionals, led by an Affinity Partner, will include ESG matters for board discussions. At our quarterly portfolio review and valuation meetings, the Affinity Partners will discuss any ESG issues relating to their portfolio companies.
Our investment professionals are key to identifying potential ESG issues and raising these issues during pre and post investment phases and helping portfolio companies develop their ESG improvement plans. We continue to develop our ESG knowledge base through regular ESG training sessions, new employee orientation and firm-wide communication.
Integrating ESG into our portfolio companies can create sustainable long-term value. Each portfolio company is different and unique, as are the ESG initiatives that we partnered with each portfolio company to create value, illustrated through the case studies below.
Trimco is a global supplier of sustainable brand identity products. It provides trims, packaging and care labels for international fashion and sports brands. Trimco’s technology-enabled labels provide the fashion and apparel industry an essential solution to the issue of supply chain traceability and transparency, connecting brand owners to consumers, and driving positive change throughout the supply chain.
Since Affinity invested in Trimco in 2018, we partnered with Trimco to develop its ESG Playbook and built a suite of strategic ESG capabilities, making sustainability a core pillar of the business. This includes:
In recognition of our efforts, Affinity was awarded the HKVCA ESG Award of Excellence in 2021 for our ESG value creation work done in partnership with Trimco. Click here for the full case study.
Towngas Smart Energy is China’s leading natural gas distributor. In November 2021, Affinity invested in Towngas to support its evolution into an integrated clean energy provider and accelerate the roll-out of distributed solar photovoltaics as part of the smart energy solution for China. With China pledging its commitment to carbon neutrality in 2060, we are excited to be supporting the global transition to renewable energy, clean energy and smart energy, and will be partnering with the company to build out its new capabilities.
SSG.com is the e-commerce platform of the #1 hypermarket and #2 department store chains in Korea. To reduce the environmental impact of disposable packaging materials, SSG is the first e-commerce player in Korea to use reusable cooler bags for its deliveries, which are more environmentally friendly than Styrofoam and cardboard packaging. SSG has also replaced chemical refrigerant with eco-friendly ice-packs made from water and paper. As part of ongoing efforts to institutionalise its ESG program, in 2021, SSG has assembled a dedicated ESG working team, and established ESG committee at the board level to ensure oversight of its ESG programme.
Shinhan Financial Group has been included among the 2021 Global 100 Most Sustainable Corporations, becoming the only Korean company to earn a spot on the list for the ninth consecutive year. Cho Yong-byung, Chairman of the financial group, said, "Joining the Global 100 for nine consecutive years is the result of our efforts to promote various environmental, social and governance (ESG) management activities at the group level, including the Zero Carbon Drive. Shinhan Financial Group will continue to develop the ESG system as a leading financial group in Korea." The Global 100 is an annual sustainable management index announced by Corporate Knights, a Canadian media group and investment research organization. It marked its 17th anniversary in 2020.