Fund Name | SRI Style | Product | Region | Asset Type | Launch Date | |
---|---|---|---|---|---|---|
Pictet Global Sustainable Credit Fund |
ESG Plus | SICAV/Offshore* | Global | Fixed Interest | 28/06/2010 | |
Fund Size: £698.00m Total screened & themed / SRI assets: £108000.00 Total Responsible Ownership assets: £202000.00 Total assets under management: £202000.00 As at: 31/03/23 Contact: lrichards@pictet.com |
||||||
OverviewPictet - Global Sustainable Credit follows a global, bottom-up investment approach and invests primarily in BBB/BBs - bonds of high-quality issuers. The fund aims to achieve a positive environmental and/or social impact by investing in sustainable companies
Combined with a strict exclusion policy, the Fund opts for a “leader” approach based on both financial and extra-financial factors. Through this “leader” approach, the Fund aims at selecting issuers with strong financial sustainability and ESG credentials, therefore better able to navigate throughout the market cycle. The Fund not only aims to invest in the securities of issuers that have sound business practices with low extra financial material risks but also aims at identifying companies that thanks to their reliable and responsible business models may emerge as leaders in their sectors. |
||||||
FiltersFund informationSustainabilitySustainability policy Limits exposure to carbon intensive industries Sustainability theme or focus Favours cleaner, greener companies UN Global Compact linked exclusion policy Sustainability focus Encourage more sustainable practices through stewardship Nature & BiodiversityAvoids genetically modified seeds/crop production Genetic engineering exclusion Climate Change & EnergyNuclear exclusion policy Coal, oil & / or gas majors excluded Invests in clean energy / renewables Fracking and tar sands excluded Clean / renewable energy theme or focus Arctic drilling exclusion Fossil fuel reserves exclusion Encourage transition to low carbon through stewardship activity Fossil fuel exploration exclusion - direct involvement Fossil fuel exploration exclusion – indirect involvement Targeted Positive InvestmentsEU Sustainable Finance Taxonomy holdings 5-25% of fund assets Invests > 5% in sustainable bonds Human RightsChild labour exclusion Social / EmploymentHealth & wellbeing policies or theme Mining exclusion Meeting Peoples' Basic NeedsWater / sanitation policy or theme Invests > 5% in social bonds Green infrastructure focus Healthcare / medical theme Ethical Values Led ExclusionsTobacco and related product manufacturers excluded Armaments manufacturers avoided Alcohol production excluded Gambling avoidance policy Pornography avoidance policy Gilts / government bonds - exclude all Gilts / government bonds - exclude some Civilian firearms production exclusion Governance & ManagementAvoids companies with poor governance Encourage board diversity e.g. gender UN sanctions exclusion Encourage higher ESG standards through stewardship activity Asset Size & MetricsOver 50% large cap companies Invests mostly in large cap companies How The Fund WorksPositive selection bias Negative selection bias Combines norms based exclusions with other SRI criteria Combines ESG strategy with other SRI criteria Focus on ESG risk mitigation Significant harm exclusion SRI / ESG / Ethical policies explained on website All assets (except cash) meet published sustain'y criteria Impact MethodologiesAims to generate positive impacts (or 'outcomes') Positive environmental impact theme Positive social impact theme Described as an ‘impact investment fund’ Aim to deliver positive impacts through engagement Over 50% in assets providing environmental or social ‘solutions’ Labels & AccreditationsEurosif Transparency SFDR Article 9 fund / product (EU) Fund management company informationAbout The BusinessESG / SRI engagement (AFM company wide) Responsible ownership / stewardship policy or strategy (AFM company wide) Responsible ownership policy for non SRI funds (AFM company wide) Responsible ownership / ESG a key differentiator (AFM company wide) Vote all* shares at AGMs / EGMs (AFM company wide) Sustainable property strategy (AFM company wide) Boutique / specialist fund management company Integrates ESG factors into all / most fund research In-house diversity improvement programme (AFM company wide) Senior management KPIs include environmental goals (AFM company wide) Invests in newly listed companies (AFM company wide) Invests in new sustainability linked bond issuances (AFM company wide) Offer structured intermediary training on sustainable investment ResourcesIn-house responsible ownership / voting expertise Employ specialist ESG / SRI / sustainability researchers Use specialist ESG / SRI / sustainability research companies Collaborations & AffiliationsPRI signatory Climate Action 100+ or IIGCC member Fund EcoMarket partner GFANZ member (AFM company wide) UN Principles of Responsible Banking framework signatory-co wide TNFD forum member (AFM company wide) Investment Association (IA) member AccreditationsUK Stewardship Code signatory (AFM company wide) Engagement ApproachRegularly lead collaborative ESG initiatives (AFM company wide) Engaging on climate change issues Engaging with fossil fuel companies on climate change Engaging to reduce plastics pollution / waste Engaging to encourage responsible mining practices Engaging on biodiversity / nature issues Engaging to encourage a Just Transition Engaging on human rights issues Engaging on labour / employment issues Engaging on diversity, equality and / or inclusion issues Engaging on governance issues Engaging on responsible supply chain issues Company Wide ExclusionsCoal exclusion policy (group wide coal mining exclusion policy) Controversial weapons avoidance policy (AFM company wide) Fossil fuel exclusion policy (AFM company wide) Climate & Net Zero TransitionEncourage carbon / greenhouse gas reduction (AFM company wide) Net Zero commitment (AFM company wide) Working towards a ‘Net Zero’ commitment (AFM company wide) Carbon offsetting - offset carbon as part of our net zero plan (AFM company wide) In-house carbon / GHG reduction policy (AFM company wide) Publish 'CEO owned' Climate Risk policy (AFM company wide) Net Zero - have set a Net Zero target date (AFM company wide) Committed to SBTi / Science Based Targets Initiative TransparencyPublish full voting record (AFM company wide) Publish responsible ownership / stewardship report (AFM company wide) Full SRI policy information on company website Paris Alignment plan publicly available (AFM company wide) Net Zero transition plan publicly available (AFM company wide) Sustainability transition plan publicly available (AFM company wide) |
||||||
PolicyWe are convinced that ESG considerations can help us make better long-term investment decisions while limiting environmental negative impact (lower carbon footprint) and contributing positively to several UN Sustainable Development Goals. As such, we are committed to integrating material ESG criteria in their investment process with a view to enhance returns. Recent examples have exacerbated the reputational risk of companies having poor corporate governance and/or low environmental considerations. We believe a growing portion of corporates’ risk is driven by extra-financial factors like fraudulent accounting or bad corporate governance. Since the Great financial crisis, governments worldwide have adopted environmental rules that are tighter, covering an increasing number of sectors and coming into force faster. Almost all companies are impacted and need to change their business models. The ones proactively adapting their business models and minimizing ESG risks will prove more resilient and emerge as leaders. Our core beliefs and approach:
|
||||||
ProcessOur investment process follows three stages:
Ahead of stage 1 of the investment process, we narrow down the investment universe by applying a set of exclusions. The exclusions can be Fund specific and/or Label specific and/or specified by the Pictet Group/Pictet Asset Management in the exclusion policy. We exclude five sectors based on harmfulness to the economy, i.e. we exclude sectors that we believe are not essential to the well-functioning of economy but carrying a higher regulatory or litigation risk such as weapon, gaming, tobacco/alcohol, adult entertainment and defence, We also exclude partly three other sectors based on harmfulness to the environment: thermal coal, oil & gas and nuclear. For gaming, tobacco/alcohol, adult entertainment and defence, companies with over 5% of their revenues linked to these activities (i.e. production) are excluded. For companies who are not producing but distribution gaming, tobacco/alcohol, adult entertainment and defence products, this threshold is increased to 10% of revenue. Ex: a retailer selling cigarette will be excluded from our investment universe if the revenue from the sale of cigarette represent more than 10% of the retailer total revenue. For thermal coal extraction and unconventional oil & gas, this threshold is 10%. For thermal coal power generation and nuclear, as well as conventional oil & gas production, this threshold increases to 25%. In addition, we are not investing in companies for which carbon emission exceed 393g CO2/kWh, meeting therefore the Febelfin label requirement. We are using an external provider for this specific filter. Finally, we also implement the Pictet Group exclusion policy on companies involved in the production of anti-personnel mines, cluster munitions, biological & chemical weapons (including white phosphorous) and nuclear weapons from countries not signatory to the Treaty on the Non-Proliferation of Nuclear Weapons (NPT). This policy applies to actively managed strategies (funds and segregated accounts). Investment managers are prohibited from trading any securities on the Controversial Weapons List, unless they are shorting the securities. It is also worth to mention that the fund complies with the SVVK- ASIK exclusion list. These exclusions are programmed into the portfolio management system, PAMFolio, and overseen by the Pictet Asset Management's Compliance department.
Stage 1: Screening on Financial Sustainability During the first step, we mainly use an external database to screen about 3000 issuers using a set of criteria that can summarize into the following categories:
Each criterion has a proprietary weighting and is ranked by quartile. Typically, we avoid companies with aggressive share buybacks programme, high dividend payout and low and unstable operational margins. Using a best-in-class approach, we keep the top quartile of each sector or about 600 issuers. By using this approach, we ensure to have a balanced and representative investment universe. The objective is to select resilient issuers with a strong ability to navigate through the business cycle.
Stage 2: Proprietary ESG framework In addition to our financial filter, in a second step, we apply our proprietary ESG filters, where all sectors are identified with over a dozen criteria of what we consider to be their most relevant Key Performance Indicators (KPIs). The main criteria can be split under the following categories with a few examples for each:
The weighting of these KPIs varies according to sectors and leads to an ESG Credit Score. We use a mix of external ESG research with providers such as CFRA, ISS, Bloomberg and Sustainalytics, and our own research. During stage 2, we screen around 600 issuers. We keep the top 50% (top 2 quartiles) of each sector or about 300 issuers at the end of this stage. These 300 issues represent our investable universe. We do not use data providers aggregate ESG score. Instead, we have developed our own proprietary scorecard with Key Performance Indicators adapted to each sector. We decided to tailor-made the ESG scorecard to each sector to better capture risks and opportunities specific to each industry. We select different ESG KPIs for each sector and weight accordingly.
Stage 3 (Portfolio Construction) is qualitative and judgmental. |
||||||
Resources, Affiliations & Corporate StrategiesPictet Asset Management has a dedicated ESG Team which leads and co-ordinates implementation of our responsible investment policy, including ESG integration in investment processes, ownership practices, risk management and reporting tools. The ESG Team reports directly to Sébastien Eisinger, Managing Partner Pictet Group, Co-CEO Pictet Asset Management and Head of Investments. Key responsibilities include: Investments
Active Ownership
Pictet Asset Management has been a signatory of the UNPRI since 2007. In addition, Pictet Asset Management actively participates in several investor initiatives aimed at sharing best practices between asset managers and owners and encouraging corporate disclosure on ESG issues. We are notably involved in the IIGCC (Institutional Investors Group on Climate Change), SSF (Swiss Sustainable Finance) and similar organisation in the UK, Germany and Spain.
Pictet Group and / or Pictet Asset Management supports and actively participates in international and national initiatives, organisations and partnerships including the below (which indicates Pictet’s involvement, year joined and key areas of focus) :
Source: Pictet Asset Management, [April 2023]
Other industry associations:
Furthermore, Pictet, together with Swiss Sustainable Finance, was leading an initiative to put pressure on index providers to remove controversial weapon manufacturers from mainstream indices. The initiative, launched in August 2018, secured the backing of 174 signatories controlling over USD 9.7 trillion and including international asset owners and managers (as of January 2020). This initiative has now been closed due to inclusion of controversial weapons exposure disclosures in draft RTS and EU Benchmarking regulation. |
||||||
Literature
Last amended: 25/01/24 10:46 |
This report is for information purposes only and is intended to complement existing services used by UK based financial advisers only. sriServices is not authorised to give investment advice. The information on this site does not in any way constitute advice, recommendation or endorsement of any product or service. Investment decisions should not be based on this information alone. sriServices cannot be held in any way responsible for decisions made or advice offered as a result of using this site.
Whilst we take care to ensure information is as accurate as possible at time of publication we recommend you/financial advisers confirm specific fund details with fund providers. Please see www.sriServices.co.uk for additional information and for our contact details.
© Copyright sriServices 2024
05/05/2024