ESG at the Sustainable Equities Boutique

The Sustainable Equities Boutique comprises several franchises, each of which implements its own unique approach to incorporating sustainability considerations into its investment processes. Sustainability considerations include management of environmental, social, and governance (ESG) risks, and fund-specific consideration of social and / or environmental objectives, or the pursuit of sustainable investment objectives.

The Sustainable Equities Boutique adheres to the Sustainable Investing and Advisory Policy of Vontobel Group. More information about the group-wide policy, including how Principle Adverse Impacts (PAIs) and sustainability risks are considered in investment decision-making, can be found at vontobel.com/sfdr .

Read more about each franchise’s approach.

ESG at mtx - Investing in leading businesses with high and growing profitability in emerging markets.

At the mtx franchise, we aim to generate long-term capital growth and rigorously manage sustainability risks in our equity funds. We understand that our investments can affect society and the environment, and that investment returns are also affected by society and the environment. We avoid investments in companies that demonstrate they are underprepared to avoid material sustainability risks, and we identify issuers that seek to include environmental or social characteristics in their economic activities. By integrating sustainability considerations into our investment processes, we enhance the risk profiles of our portfolios and select companies for their ability to manage their real world impacts.

To be included in our portfolios, a company needs to be in the first quartile in terms of returns on invested capital (ROIC) and industry position, trade at a discount to its intrinsic value, and fulfil our minimum ESG standards. We evaluate all investments against sustainability criteria, including hard thresholds for inclusion in our funds.

We use a proprietary ESG scoring model against which we evaluate prospective investments according to approximately 25 sustainability indicators appropriate to each industry sector. The E, S and G criteria range from environmental commitments, human capital management, data privacy & security, and sustainability issues in the supply chain to provisions against bribery and corruption, as well as various elements assessing strong corporate governance.  In addition, we ensure that sustainability standards are met and maintained by employing a number of safeguards; we apply an ESG controversies framework, we exclude companies that breach international norms and standards (unless they take adequate remedial action), and we conduct ongoing monitoring as well as an annual review of sustainability performance. We also take an active role in voting and engagement with companies on sustainability matters of concern. 

Finally, we exclude a number of business activities from our funds, including production of controversial weapons, tobacco, and palm oil, and more than minimal revenues from coal (power and extraction), oil sands, nuclear energy, adult entertainment, weapons contracting, and tobacco retailing. 

Our in-depth ESG research benefits from a number of specialist data providers, including Sustainalytics, MSCI, ISS, Syntao Green Finance (focused on China A Shares), Bloomberg, RepRisk as well as many sell-side research brokers with ESG expertise.  We partner with Hermes Equity Ownership Services Limited, which specializes in the exercise of shareholder rights by providing voting recommendations and engaging with some investee companies via constructive, objectives-driven and continuous dialogue on ESG issues.

ESG at Swiss Equities - Investing in excellent companies in Switzerland.

At the Swiss Equities franchise, we have been investing based on environmental, social and governance (ESG) principles for more than 20 years. We offer two of the largest actively managed Swiss equities products (in terms of assets under management) that consider social and environmental objectives: Raiffeisen Futura - Swiss Stock, and Vontobel Fund (CH) Ethos Equities Swiss Mid & Small. To manage sustainability risks, we use exclusion, ESG integration, and best-in-class approaches. We have also defined a number of sustainability factors that we consider relevant to the investment process from a quality standpoint.

  • Innovation: We perform frequent checks to establish to what degree sustainability aspects are part of the company’s innovation strategy. We evaluate whether staff and management follow sustainability rules, whether ESG is embedded at a corporate strategy level, and how sustainability targets evolve over the years.
  • Management quality: We have defined two criteria related to management quality. Firstly, we check whether management systems are aligned with sustainability objectives. For example, are there organizational structures to control and implement sustainability targets, especially in the areas of quality, environmental protection as well as employee health and safety? Secondly, we evaluate the effectiveness of stakeholder management. This includes checks to what degree the company takes the interests of stakeholders such as customers, suppliers, and employees seriously.
  • Corporate governance: With respect to corporate governance, we evaluate the company’s shareholder structure, the diversity of the board and management team, as well as the independence of the board of directors.