At ETHENEA, our commitment to provide our clients with responsible investment solutions that offer competitive and sustainable returns is reflected in all of our investment policies, processes, and practices.
To formalise this commitment further, in November 2017, we became a signatory of the United Nations-supported Principles for Responsible Investment (PRI). We firmly believe that the six principles set out by the PRI will support our goal of delivering long-term sustainable value for our clients. Having already excluded investments in tobacco within the Ethna Funds since mid-2013, we subsequently signed the Tobacco-Free Finance Pledge in January 2019.
With regard to ESG criteria, we use the three steps below when selecting securities for our portfolios. In order to ensure we have the necessary information for this process (in terms of both quantity and quality), we work with Sustainalytics, an independent and specialised company that carries out ESG research on our behalf.
1. Broad exclusion
Using the PRI, research provided by Sustainalytics, and our own proprietary dataset, we exclude companies whose core business is in one of the following areas:
Although the tobacco industry has always been a profitable investment, many investors are concerned that the industry’s societal costs significantly outweigh its benefits.
Armaments, in particular civilian firearms, is an incredibly polarising topic. At ETHENEA, we have decided not to invest in any company that, as a significant part of its publicly declared business, is involved in this area.
Speculation on staple foods such as wheat, maize, and soy, results in significant price fluctuations and leaves millions starving and facing increasing poverty. Therefore, we have made a conscious decision not to invest in any companies involved in food speculation.
In today’s society, increasingly more attention is being given to the prevention of sexual exploitation. Therefore, for ethical reasons, ETHENEA has chosen not to invest in companies whose core business is in the adult entertainment industry.
At ETHENEA, we recognize and respect the rights and fundamental freedoms of all individuals. For that reason, we will not invest in a company if there is an inherent risk that it is participating in or cooperating with serious or systematic human rights violations.
2. Exclusion based on overall ESG score
In addition to the first exclusion, which is primarily based on the company’s products, in a second step we exclude issuers of equities and bonds whose overall ESG score does not meet the minimum threshold for our combined environmental, social, and government requirements.
3. Individual ESG analysis
Finally, as an integral part of the investment decision regarding every single security, we look at individual issuers of equities and bonds and review their results in each category – environmental, social and governance. As with the more traditional parameters for expected risk and return, we also consider ESG criteria when assessing the suitability of investments for our portfolios. This allows us to raise the overall sustainability of our portfolios to a higher level without compromising risk or return.
These measures enable us to make an active contribution to a sustainable future.
For more information:
Responsible Investment Policy