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Sustainable Investments Quarterly Newsletter
June 2022

Is sustainability worthwhile for investors?

It is now a truism to say that sustainability considerations have taken on an indispensable role in society, the economy and finance. Taking environmental, social and governance (ESG) factors into account when making investment decisions is part of the new normal. That said, when it comes to sustainability we do not live in a binary world. Leaving extreme examples to one side, it is not simply a case of dividing business models, operations or products into good and bad – in most cases the truth lies somewhere in between.
While electromobility is making a material contribution towards climate change mitigation, challenges are emerging due to the use of lithium and cobalt in the batteries that this requires, and the environmental and social harm that mining and processing these metals can entail. It is therefore advisable to take a more nuanced approach, one that gives investors in sustainable assets the chance to replicate their personal preferences in their investment portfolios.
The following considerations offer a structured approach:
  1. Exclusions: ruling out investments in controversial business areas based on an investor’s personal values. These are non-negotiable, which means that returns are of secondary importance.
  2. ESG integration: systematic acknowledgement of financial, material E, S or G indicators in the investment process with the aim of making better-informed investment decisions.
  3. Impact-focused and impact-aligned investments: contribution to the United Nations’ Sustainable Development Goals in addition to financial returns.
This edition of our newsletter aims to contribute towards this vital discussion, examining the financial materiality of ESG factors from various perspectives.

Key topics covered:
  • ESG: Short vs long-term perspectives
  • Combining sustainability with financial analysis for deeper insights
  • Correlation between ESG factors on valuation drivers
  • Building an investment universe based on ESG ratings
  • How sustainable is Swiss indirect real estate?
  • Mowi: Engagement example in the fish farming sector
  
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