Introduction to Different Approaches to Sustainable

Chapter 14. Green Bonds

Green bonds are a suitable instrument for funding renewable energies and hence the energy transition. The market for green bonds is based on voluntary standards and is gradually becoming more structured.

Chapter 15. Sustainable Infrastructure Investments

The consideration of ESG criteria is especially appropriate in the case of infrastructure projects due to their inherent longevity and capital intensity. Applying ESG criteria creates added value, brings additional benefits for the environment, society, and the economy, and has the potential to make infrastructure investments more attractive.

Chapter 16. Sustainable Private Equity Investments

Private equity investors have inherent corporate governance advantages unlike investors in other asset classes. This opens opportunities for better sustainable investments and higher investment returns. Compared with primary or secondary investments, direct private equity exposures offer better opportunities to integrate ESG criteria and create social benefits.

Chapter 17. Sustainable Real Estate

Sustainable real estate today accounts for a significant share of the property market as a whole and offers great investment potential. Sustainable properties are economically attractive and offer risk diversification. Green labels, performance indicators, and benchmarking initiatives increase transparency.

Chapter 18. Integrating Sustainability into Commodity Investing

One of the main discussions concerning commodity investments and sustainability issues revolves around the impact of physical and derivative investors on commodity prices. Investors in commodity derivatives fulfil an important role in food security through their contribution to lower price volatility, given that the

investments are managed actively and exclude futures contracts with measurable destabilising price effects. ESG issues of physical commodity investments are related to price impact as well as social and environmental issues along the value chain (traceability).

Part 3: Special Themes

Chapter 19. Climate Change and Associated Risks for Investors

Climate change regulation and its impact present growing risks for investments. A wide range of instruments and strategies are available to investors to help them understand, measure, and mitigate these risks.

Case Study: Nest Collective Foundation

A pioneer in sustainable investment places greater emphasis on the carbon intensity of its portfolios.

Chapter 20. The Role of Indices in Sustainable Investment

Virtually all the major index providers today offer numerous sustainability indices based on different sustainable investment approaches. On the one hand, these indices can be used as an investment universe for active investment strategies. On the other hand, they are also suitable for passive strategies implemented via index-linked funds.

Case Study: Swissport Company Pension Fund

A tailor-made passive investment product is developed for a company pension fund.

Chapter 21. Transparency of Sustainable Investments

Creating transparency requires effort but fosters credibility and legitimacy through lower reputational risks. There is no defined, generally valid standard for reporting on sustainable investments. However, this offers flexibility to develop customised solutions based on individual requirements.

Part 4: Steps to Implementation

Chapter 22. Implementing a Sustainable Investment Policy—A Practical Guide

• There is no single recipe for implementing a sustainable investment policy but rather various approaches with different objectives and impacts. • A suitable approach can be identified for each asset class depending on the primary motivation. • Implementation of the sustainable investment policy can be carried out internally or outsourced to external providers. • In either case, the results should be monitored on a regular basis.

Reporting on the sustainable investment policy offers transparency to different stakeholders.