In the Thematic Investing Boutique based in Zurich, consideration of ESG issues are fully integrated into company evaluation. Vontobel's sector specialist analysts are synthesizing their own analysis with inputs from external sustainability specialists and the ESG Investment Committee to form a view on the issues that are most likely to impact the investment case of a company.
Vontobel has switched to this truly integrated approach in 2010 and has further developed the process since. In regular sustainability meetings, analysts, portfolio managers and the corporate sustainability manager discuss individual company assessments and decide about edge cases.
Furthermore, we developed a proprietary CO2 Footprinting and assessment tool:
There is broad consensus among politicians, scientists and the business community that global warming needs to be restricted to 2° Celsius. The Paris Agreement, which entered into effect on 4 November 2016, will accelerate the transition to a climate-friendly society. It is therefore necessary for the finance industry to take greater account of the risks of climate change and to report on them transparently. This is why Vontobel works with South Pole Group, which offers innovative sustainability solutions and has extensive expertise in the measurement of environmental factors.
The current carbon footprint of an investment portfolio is measured primarily for risk assessment purposes. This is the most common method used and shows which sectors and companies – in absolute terms – are responsible for the highest emissions in the portfolio. The focus here is primarily on the calculation of the emissions generated as a result of the company’s operations, e.g. when manufacturing goods and products.
With the additional measurement of potential avoided emissions (PAE), we are going one step further: We record the expected avoided emissions of a company’s products. This methodology provides a relative view of harmful emissions and thus follows a solution-oriented approach that shows the specific contribution that energy-efficient, climate-friendly products and services make to the reduction of CO2 emissions.
This is all the more important since the emissions generated during the use of a product are often significantly higher than the emissions generated while it is being produced. For example, a refrigerator generates substantially more emissions while in use than during the manufacturing phase. The energy efficiency of appliances such as these is therefore the most important environmental and also economic aspect.