Proya Cosmetics

Proya Cosmetics (“Proya”) is China’s fifth largest beauty and skincare company. Proya has five brands, focused on younger consumers and is enjoying rapid sales growth through its online channels and boutiques. The company has invested in product upgrades and innovation, expanding beyond its traditional skin-care related products into colour cosmetics. Our Investment Manager has engaged with Proya on several issues, including its use of certain chemicals in products, animal testing and sustainable packaging. Proya now closely follows China’s strict environmental protection laws and regulations. It has also eliminated all non-degradable raw materials such as microbeads from its products, replacing them with natural degradable materials. Up until October 2022, Proya was rated CCC rating by MSCI, and was considered an ESG “laggard”. However, based on on-the-ground engagement, it was clear that the company’s management was more advanced in its thinking and ESG practices than its disclosures suggested. Therefore, we encouraged management to improve disclosures. As a result, MSCI has now upgraded the Proya’s rating to BBB, which is considered an “average” rating and our Investment Manager expects this to advance further over time with the company’s understanding of its ESG obligations and opportunities for further improvements.

Companies selected for illustrative purposes only to demonstrate the investment management style described herein and not as an investment recommendation or indication of future performance.