Forum Nachhaltige Geldanlagen Schweiz and onValues today published the results of the regular survey of the Swiss sustainable investment market per end of December 2010, which includes sustainable assets managed in Switzerland through funds, mandates and structured products. A total of 21 managers reported their assets under management in a range of different sustainable investment styles.
Per end of 2010 the sustainable market reached a new high of 42 billion CHF, which corresponds to an increase of 23% compared to the same value per end of December 2009. On average, net inflow in sustainable funds amounted to approximately 3.6% in the course of 2010. In comparison, the average comparable Swiss fund experienced a net outflow of the same order of magnitude.
Retail/private banking investors have further expanded their majority position in the market (57% of the total market, compared to the 43% of institutional investors). Equity, with its share of 63%, remains the most important asset class having slightly increased its market share compared to last year.
Not much has changed in terms of the use of different sustainable investment approaches, but the use of active proxy voting has notably increased. 44% of respondents reported that they are planning introducing a proxy voting policy that includes sustainability issues for the entire assets managed by their institutions in the coming years.
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«Sustainable investments in Switzerland 2010»
In collaboration with the Swiss Federal Department of Foreign Affairs, the UN PRI and the UN Global Compact, onValues has today published a report focusing on the environmental, social and governance (ESG) issues involved in different types of commodities investments. The report shows that the issues at stake and available management options for institutional investors vary greatly between investments in commodity derivatives, in physical commodities, in real productive assets or in the equity of public companies.
To successfully navigate this complex landscape, long-term investors should consider the ‹systemic› effects of rapidly growing institutional investment in commodities. The report includes a series of practical recommendations aimed at reducing the risk that derivatives investors impact commodity price levels and volatility. The report is critical of investments in physical commodities: they lead to investors competing with industry in already tight markets, hoarding commodities with no productive use and directly influencing prices. Holdings in productive assets such as farmland, on the other hand, can be managed to a high degree of ESG performance, but require a commensurately high degree of investor expertise, while public equity stakes can be used as the basis for shareholder engagement.
Besides listing a series of possible actions for responsible investors, the report also highlights areas for further research and engagement.
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«Responsible investment in commodities»
On behalf of the Swedish foundation Mistra, onValues has initiated a project aimed at assessing how leading European foundations use sustainable and responsible investments (SRI) and so-called «impact investments» to better align the endowment management to their mission. Research shows that foundations can invest in SRI without negative repercussions on financial returns. Foundations also have the possibility to directly contribute to their missions through the emerging field of impact investments, which aim to create a tangible social return while preserving invested capital.
The report resulting from the project will showcase European foundations that have adopted SRI or impact investment strategies in support of their missions. Through detailed case studies and personal interviews with foundation trustees and managers, the report will extract key messages for other foundations considering this process. Alongside these case studies, the report will convey basic information on the challenges of implementing SRI and impact investing and point to resources for further support.
This is the first report to focus specifically on responsible investment at European foundations and onValues plans to present its findings widely. Further information will be available in spring 2011.
On behalf of the Swedish foundation Mistra, onValues convened – for the sixth consecutive year – leading institutional investors, service providers and academic researchers to assess best-practice in a specific domain of sustainable investing. This year, the workshop focussed on the state-of-the-art of shareholder engagement and on the approaches and techniques used by investors to influence company ESG performance, in view of further improving their effectiveness. The questions addressed during the workshop included the following:
- What are the key factors that contribute to effective engagement?
- What can be said about the effectiveness of different forms of ‹delegated› engagement
(e.g. delegation to service providers, to collaborative initiatives, to asset managers)?
- How can different engagement approaches be combined to maximise effectiveness
- What can a small asset owner with limited resources do to maximise its impact?
Key lessons learned from the workshop can be found in the summary report below:
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«Engaging Effectively – Summary»