In terms of sustainable implementation, we distinguish between the global and the Swiss equity part.
The global equity part of our sustainable strategies is implemented with sustainable ETFs and index funds based on the MSCI Socially Responsible and the MSCI ESG Leaders Indices. Sustainability is taken into account in various ways:
- First, certain industries are completely excluded. These include alcohol, gambling, tobacco, eroticism, nuclear power, military weapons, civil firearms and genetically modified organisms.
- All remaining industries are then analyzed and evaluated in the second step in the environmental, social and corporate governance (ESG for environment, social and governance) areas. The resulting ESG rating ranges from CCC to AAA. A “good” or at least an A must be achieved in order to be included in the index.
- Third, it is also examined whether a company has been subject of controversy (e.g. human rights violations or causing serious environmental damage). Companies with a score of four or higher (on a ten-point scale) are also excluded.
Finally, the best-in-class approach means that in each industry, companies with the best ESG rating are considered first and included in the Index. This happens until 25% (50% in the case of the MSCI ESG Leaders indices) of the market capitalization of the respective industry is reached.
The Swiss equity component is deliberately implemented in a classic (non-sustainable) way. This is for the following reasons: In principle, the Swiss market is already more sustainable per se than most other markets. This is because industries such as tobacco, alcohol, weapons etc. are not represented at all. What is then usually done with sustainable Swiss funds is that they are additionally filtered according to ESG ratings. For example, Novartis is then excluded (governance issue), whereas Nestlé or Roche are not. Additionally the Swiss market as measured by the SPI is dominated by these three heavyweights. Other international stock indices often have a much broader natural diversification. Excluding one of these heavyweights results in a very large deviation from the index and thus a different risk profile. This problem is often solved in sustainable funds in such a way that the heavyweights are not (or only partially) excluded, but only reduced in weighting. In our view, however, this only embellishes the problem, but does not solve it.
Consequently, we deliberately refrain from “greenwashing” the Swiss equity part. The Swiss equity market meets the exclusion criteria of many sustainable investment approaches without additional filtering and is therefore already “more sustainable” per se.
It is also important that our investment focus on “Global”, “Switzerland” and “Global Sustainable” – as the name suggests – is a focused implementation of the theme. International equities also account for around 25% of the Switzerland 100 strategy. In our opinion, the fact that a “label” is used to try to make the Swiss equity component look sustainable is not a goal-oriented approach. With the classic approach to Swiss equities, we are not trying to solve this problem half-heartedly, but are optimizing the foreign equity component where added value can really be generated and are consciously committed to the chosen implementation.
PS: By the way, all of our chosen strategies already have a lasting impact. On the one hand, this is due to the fact that we avoid the senseless sending of millions of pages of paper and, on the other hand, we have a tree planted for each VIAC client. These are already over 30’000 trees with which we help to slow down climate change and achieve a real impact: day by day.