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Zürcher Kantonalbank

PRI reporting framework 2018

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Investment policy

SG 01. RI policy and coverage

New selection options have been added to this indicator. Please review your prefilled responses carefully.

01.1. Indicate if you have an investment policy that covers your responsible investment approach.

01.2. Indicate the components/types and coverage of your policy.

Select all that apply

Policy components/types

Coverage by AUM

01.3. Indicate if the investment policy covers any of the following

01.4. Describe your organisation’s investment principles and overall investment strategy, and how they consider ESG factors and real economy impact.

In the bank-wide sustainability policy of Zürcher Kantonalbank the relevant ESG aspects are defined. We review our sustainability policy on a regualar base. We have detailed guidelines for all actively managed Equities. Additionally, detailed guidelines exist for all SRI products and describe the combined investment approach for our two productlines (Sustainable/Resposible) with at least exclusion criteria and ESG-Screening. Internal guidelines describe the scope of each exclusion criteria in depth and describe the indicators as well as the scoring mechanism used in the selection process. Zürcher Kantonalbank's sustainable investment funds, which were marketed under the Label Swisscanto Invest, were awarded the Transparency Code (Transparenzkodex) by Eurosif, the European Sustainable Investment Forum.

 

 

01.5. Provide a brief description of the key elements, any variations or exceptions to your investment policy that covers your responsible investment approach. [Optional]

1. Investment-approach-for-actively-managed-Equities

For all listed equities we systematicly exclude producers-of-controversial-weapons.
Definition of controversial weapons:

  • Anti-personnel landmines
  • Biological and chemical weapons
  • Nuclear weapons
  • Small and light arms (added 2017)
  • Munitions and explosives for weapons
  • Cluster bombs and cluster munition

ESG-integration-approach-equities (except-quantitative-managed-funds/mandates)

Backed by academic theory and long-term practice insights we believe that owning companies that are both high quality businesses and inexpensively valued is the best way to generate sustainable long term investment performance which inherently is also a sound way to limit risks on the downside.

Our investment approach is thus focused on realising premiums from companies with attractive quality and value characteristics. Our goal is to achieve superior investment results by identifying companies trading at attractive valuation with a solid track record in Return on Invested Capital (ROIC) generation and that operate in a high quality business from a fundamental and ESG perspective.

ESG-Assessment:
Our ESG-Assessment aims to achieve the following goals:
1) We want to avoid investing in companies which have an unfavourable risk-return-profile, due to material ESG risks not yet (well) reflected in the valuation. We strive to identify potential risks to shareholders which could disrupt the share price.
2) We want to improve our understanding of the key economic drivers of each industry by addressing the key ESG challenges per industry

When addressing the ESG issues, PM/Analysts are required to discuss the potential impact on valuation with the different ESG analysts to better understand whether the ESG issues are sufficiently reflected in the share price. These ESG issues are mostly sector relevant and should be addressed during an interaction with company and/or broker/analyst.

We review our invesment policy and our ESG-Assesment on a yearly base.

Comprehensive Publication about ESG-Integration in listed equities: https://products.swisscanto.com/dam/jcr:8ce3c23b-4bc3-43d7-8c2d-642f0f472001

 

2. Investment-approach-for-Sustainable-products (equities & fixed income)

2.1 Product-Line "Responsible" (equities and listed corporate bonds)

Ex-ante exclusion criteria for companies:

=> Anthropogenic climate change

  • Companies with coal reserves

=>Loss of biodiversity

  • Genetic engineering

=> Threat to society and health

  • Nuclear energy
  • Production of arms and war material
  • Production of tobacco and smoking products
  • Production of alcohol (turnover threshold 5%)
  • Gambling (turnover threshold 5%)
  • Child labour (own operations)
  • Pornography

Laggard-out process (equities and corporate bonds): The application of the exclusion criteria is followed by a sector analysis: The aim is to exlude the worst companies in their respective industries and regions in terms of environmental protection, social and governance issues. The selection of is based on a multi-step process. The quantitative analysis compares roughly 50 environmental, social and corporate governance indicators. The data is obtained from specialized providers (such as Asset4, Trucost, MSCI ESG Research & Governance Metrics or RepRisk).
Overall (exclusion and Laggard-out process) we exclude around 20% of the original investment universe.

2.2 Product-Line "Sustainable"

=> Focus on a high "sustainable impact" (equities and listed corporate bonds)

Ex-ante exclusion criteria:
=> Anthropogenic climate change 

  • Companies with coal reserves
  • Extraction of fossil fuels
  • Operation of fossil-fuel power stations
  • Production of cars and aircrafts
  • Airlines 

=> Endangerment of the Earth's atmosphere

  • Production of substances that deplete the ozone layer

=>Loss of biodiversity

  • Not sustainable forestry
  • Not sustainable fishery and fish farming
  • Not sustainable palm-oil plantations
  • Genetic engineering

=> Threat to society and health

  • Nuclear energy
  • Production of arms and war material
  • Production of tobacco and smoking products
  • Production of alcohol (turnover threshold 5%)
  • Gambling (turnover threshold 5%)
  • Child labour (own operations)
  • Pornography

The application of the exclusion criteria is followed by a sector analysis for companies: The aim is to extract those companies in their respective industries and regions that set an example by excelling at taking responsible actions in terms of environmental protection, social and governance issues. The selection of is based on a multi-step process. The quantitative analysis compares roughly 50 environmental, social and corporate governance indicators. The data is obtained from specialized providers (such as Asset4, Trucost, MSCI ESG Research & Governance Metrics or RepRisk). Then, we carry out a qualitative product and sector analysis, which is mainly built on the know-how, experience and industry-specific knowledge of our analysts.

The sector analysis is followed by a fundamental stock analysis with a strong focus on companies with a high "sustainability impact". The following investment opportunities were defined: Energy: Renewable energy, energy efficiency. Sustainable Mobility: Public transport, Individual transport. Knowledge: Education/Research, Interlinking. Health: Access to basic health supply, Preservation of health. Finance: Access to financial services, Financial infrastructure. Resources: Efficient use of water, resource efficiency.

Sustainable Fixed Income Assets (other fixed income types than listed corporates):

Special research process exists for different types of fixed income of supranationals, cities and SSA (Analysis of countries).

 

3. Investment-approach-for-actively-managed-Fixed-Income-Assets

For all listed companies we systematicly exclude producer-of-controversial-weapons.
For all listed companies we incorporated ESG-Data into the portfoliomanagementtool of our fixed-income fundamental management  team.

 

4. Investment-approach-for-Commodities
We do not offer specific investment vessels for single soft commodities for wheat, corn, soya and rice to our customers. Further we do no property trading with the mentioned soft commodities.

For customers who wants to invest in commodities (collective investment vessel) - but not in soft commodities (wheat, corn, soya and rice) - we offer a specific structured commodity product, which excludes e.g. futures on single soft commodities.

 

5. Investment-approach-for-Direct-Property

We consider sustainability aspects in connection with property management. Our sustainability assessment is focused on the one hand on economic aspects and on the other hand we strive to boost the societal and ecological benefits or at least we seek not to reduce it.

Our Goals

  • We act consciously in every aspect of sustainability. We consider social, environmental and economic aspects along the entire life cycle of a property.
  • We act appropriate and in a systematic way.
  • We strive to raise the awareness of all involved stakeholders for sustainability issues.
  • We preserve compatibility with political frameworks.
  • We ensure a consistent sustainability assessment along the entire life cycle of our properties (acquisition, construction and management).
  • We mainly focus in a quantitative way on energy efficiency respectively on the reduction of CO2 emissions.  In quantitative terms, we mainly focus on sustainable construction.

SG 02. Publicly available RI policy or guidance documents

New selection options have been added to this indicator. Please review your prefilled responses carefully.

02.1. Indicate which of your investment policy documents (if any) are publicly available. Provide a URL and an attachment of the document.

URL/Attachment

URL/Attachment

02.2. Indicate if any of your investment policy components are publicly available. Provide URL and an attachment of the document.

02.3. Indicate if your organisation’s investment principles, and overall investment strategy is publicly available

02.4. Additional information [Optional].

Zürcher Kantonalbank and the Swisscanto group offer their customers and sales partners a comprehensive range of investment and pension products and services under the product brand Swisscanto Invest by Zürcher Kantonalbank.

  • Swisscanto Holding Ltd. is a Zürcher Kantonalbank group company.
  • In 2014 Zürcher Kantonalbank integrated Swisscanto Holding Ltd.
  • Swisscanto Fund Management Company Ltd., Swisscanto Pensions Ltd. and Swisscanto Asset Management International SA (Luxembourg) are wholly owned subsidiaries of Swisscanto Holding Ltd.

 


SG 03. Conflicts of interest

03.1. Indicate if your organisation has a policy on managing potential conflicts of interest in the investment process.

03.2. Describe your policy on managing potential conflicts of interest in the investment process.

Conflicts of interest along the RI investment process are addressed with several measures. The stock selection for the sustainable investment universes are made independently. Furthermore Zürcher Kantonalbank adopts and monitors guidelines regarding insider trading and compliance in the asset management department.

03.3. Additional information. [Optional]


SG 04. Identifying incidents occurring within portfolios (Private)


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