Neftaly Internal Audit: Responsible Investing in Holdings

Objective:
The internal audit of Responsible Investing aims to ensure that Neftaly Holdings integrates environmental, social, and governance (ESG) principles into its investment strategies, risk management, and decision-making processes. The audit evaluates the effectiveness, compliance, and alignment of investments with the company’s responsible investing framework and global best practices.

Scope:
The audit covers all investment holdings under Neftaly, including:

• Equity and debt investments
• Venture capital and private equity portfolios
• Green and impact investments
• ESG-screened funds and alternative investments

Key Audit Focus Areas:

1. Governance and Policy Compliance:
   • Review of Neftaly’s Responsible Investing Policy and ESG integration guidelines.
   • Assessment of compliance with local regulations and international standards (e.g., UN PRI, EU SFDR).
   • Verification that investment committees incorporate ESG considerations in decision-making.
2. ESG Integration and Due Diligence:
   • Evaluation of ESG risk assessments conducted for potential investments.
   • Analysis of ESG data collection processes and reliability of reporting from portfolio companies.
   • Confirmation that ESG factors are embedded in investment valuation, risk scoring, and monitoring processes.
3. Impact and Performance Monitoring:
   • Review of ESG performance metrics for existing holdings.
   • Assessment of progress against environmental and social impact objectives.
   • Validation of internal reporting mechanisms and transparency to stakeholders.
4. Risk Management:
   • Identification of ESG-related risks (climate, human rights, regulatory, reputational) across the portfolio.
   • Assessment of mitigation strategies and internal controls to manage responsible investing risks.
   • Verification that ESG-related risks are reported at the board and investment committee levels.
5. Training and Culture:
   • Evaluation of employee awareness and training programs on responsible investing principles.
   • Review of incentives and accountability mechanisms to encourage ESG-aligned investment decisions.

Audit Methodology:

• Document review: Policies, investment guidelines, ESG frameworks, and committee minutes.
• Data analysis: ESG ratings, risk reports, and investment performance metrics.
• Interviews: Investment managers, ESG analysts, compliance officers, and key stakeholders.
• Testing: Sample investment files to verify ESG integration and due diligence processes.

Expected Outcomes:

• Identification of gaps in ESG integration, reporting, or governance processes.
• Recommendations for enhancing ESG compliance, monitoring, and impact measurement.
• Assurance that Neftaly Holdings’ investments align with responsible investing objectives and long-term value creation.

Conclusion:
The audit provides Neftaly Holdings with an independent assessment of the effectiveness of its responsible investing practices, reinforcing the organization’s commitment to sustainable, ethical, and impact-focused investment strategies. It ensures that ESG considerations are consistently embedded across all holdings, mitigating risks and enhancing stakeholder trust.