We at Vontobel Asset Management want to help you make informed and active choices when it comes to ESG investing. But before you make a decision, you need to know what exactly your needs and beliefs are, and what investment approaches are available.
Environmental, social, and governance (ESG) standards can serve multiple purposes. Do you look for ESG to improve financial performance? Does ESG stand for investments in line with your values and convictions? Or both of the above?
Whatever your goals are, the ESG approach you choose will affect your portfolio. We have defined six categories which we use to describe ESG investments: impact investing, thematic, best-in-class, integration, engagement, and exclusion, categorizing them according to the motivation and the resulting effect.
The six approaches can be explained as follows:
Investing in activities with a positive impact on the environment or society. The main focus here is “doing good”, rather than investment performance.
Investment focused on opportunities related to a single theme or megatrend. Results in a concentrated portfolio that should perform if the trend develops as expected.
Only invests in companies with excellent ESG performance relative to others in their sector, often based on external database information. The focus is not on companies with moderate ESG scores with other attractive characteristics.
Includes ESG as a fully integrated element of the investment process, with ESG scorings combined with other factors to support investment decisions. The aim is a portfolio blending ESG and other characteristics. It requires a purpose-built investment process and portfolio management staff able to conduct ESG alongside other types of investment analysis.
Investors aim to influence company management to improve business practices. A wide range of engagement levels exist, ranging from proxy voting through to public engagement as practiced by prominent activist funds.
Filtering out undesirable companies or sectors, either based on convictions or on international norms e.g. regarding weapons. Typically applied at the start of the investment process. While the companies in the portfolio meet ESG minimum standards, other factors are more important for the shares.
One of the old myths about investing is that ESG and performance don’t go together. Actually, they do, according to a review of more than 2,000 academic studies (“ESG and financial performance: aggregated evidence from more than 2,000 empirical studies,” Friede, Busch and Bassen, December 2015). There are three core ways in which ESG can improve investment results.
We believe there is no “one size fits all” ESG approach. There are simply too many investment styles, investor objectives, geographies, and asset classes. Being an active asset manager, we develop specialized ESG strategies covering a wide range of client needs in a targeted manner. We are convinced this leads to better results than standardized products, such as passive ESG exchange traded funds (ETFs).
Looking for the “right” ESG approach already puts you on the path towards active investing. If you are ready to invest independently of a benchmark, we can help you start your journey. Here is an overview of our ESG product range and our processes.
ESG at Vontobel Asset Management is managed on three levels:
We exercise voting rights at the annual meetings of companies whose shares we hold in our sustainable and thematic portfolios, and engage in active dialogue with them. To be able to do this efficiently, we work with leading service providers in the field of voting rights and corporate dialogue. Read our engagement policy. Read our voting policy.
Examples of how we exercise our voting rights and how we engage with companies can be found here. Vontobel Asset Management - Voting & Engagement Report
Vontobel's heritage and strategic focus on sustainability help make us one of the leading asset managers for sustainable investing in Europe and Switzerland.
Vontobel has a long tradition of corporate responsibility and sustainability. We are a founding member of Swiss Sustainable Finance, and have received numerous awards for our sustainable investment funds.
The sustainability rating agency ISS-oekom awarded Vontobel the rare "prime" status, and we received an above-average score “A+” for the implementation of the U.N. Principles for Responsible Investment (PRI).
We launched our first equity fund with an ESG focus in 2001. Ever since, our sustainable equity offering has grown significantly in volume and importance. On the multi asset side, we gained substantial ESG expertise through the acquisition of Vescore in 2017. The transaction enabled us to harness the skills of some of the industry’s original pioneers and advocates. The year of 2018 saw the launch of a bond fund with a sustainability angle, an offering we plan to expand soon with similar fixed income products.
ESG approaches are now possible in most asset classes. However, there are limitations. For instance, if US issuers of high-yield bonds are mostly energy companies, it is impractical to build a well-diversified ESG portfolio in this segment. To include ESG in your portfolio, you need to consider your objective, asset class and geography.
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|
Equities | Multi asset | Fixed income |
|---|---|---|---|
| Best-in-class |
Global European Switzerland |
Global |
Global Emerging markets Switzerland |
| Integration |
Global Emerging markets Asian |
Solutions available on request | |
| Thematic |
Clean technology |
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