Sustainable Investments and Institutional Investors

An ESG integration process takes into account the long-term growth prospects, not only making a portfolio attractive from a sustainability perspective but also improving the risk–return profile.

Chapter 9.1. Enhancing the Investment Process through ESG Integration

• An example illustrates how an ESG assessment is integrated as a key component of the investment process. • The ESG assessment carried out by financial analysts helps them better understand the value drivers and risks of a company and creates added value for investors.

Chapter 9.2. Optimised Geographical Asset Allocation Thanks to ESG Integration

• Political, macroeconomic, and resource-oriented criteria are relevant for an optimised geographical asset allocation. • Long-term ESG trends, which can be measured quantitatively, give an early indication of structural changes that are not analysed by mainstream investors and rating agencies.

Chapter 9.3. The Role of ESG Integration in Emerging Market Investments

• The limited availability of ESG information is one of the main challenges for an ESG integration approach in the context of emerging markets. • Dialogue at the board level can provide access to senior management, thereby making it easier to access information. • The ESG integration approach adds value to the investment process.

Case Study: Zurich Insurance Group

An insurance company integrates sustainability criteria throughout its investment processes.

Chapter 10. Exercising Voting Rights

Exercising voting rights is an important means for shareholders to express their views on what constitutes good business management.

Detailed analysis of all agenda items requires substantial resources, which is why many investors delegate their decisions to proxy advisors. Although the board’s proposals are seldom rejected in Switzerland, even a small percentage of “no” votes makes the company management more amenable to discussing the concerns of critical shareholders and perhaps adapting the strategy.

Case Study: Pension Fund of the City of Zurich

A public pension fund gets involved as an active shareholder, in foreign companies too.

Chapter 11. Shareholder Engagement—Dialogue with Companies

Shareholder engagement is a long-term process aimed at systematically promoting key ESG aspects in the business practices of portfolio companies. Portfolio managers can use shareholder engagement as the basis for optimised investment decisions. Since it is a resource-intensive and specialised process, it may make sense to delegate engagement to an independent provider or cooperate with other investors.

Case Study: PUBLICA Federal Pension Fund

The Pension Fund of the Swiss Confederation joins forces with other public sector investors for engagement and exclusion.

Chapter 11.1. Shareholder Engagement: Experiences of a Swiss Investor Collective

• Pooling investors makes it possible to conduct an effective dialogue with companies on sustainability issues. • If this improves company performance, all the involved investors will benefit.

Case Study: CAP Prévoyance

A public sector pension fund focuses its investments on long-term, sustainable development.