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  • Umwelt: EMS: Konzernweite EHS-(Environment-Health-Safety)-Organisation, EHS-Politik und EHS-Programme auf Basis eines konzernweiten Systems von Umweltindikatoren; regelmässige Umwelt- und Risikoaudits Produkte: Konzernweites System der Produktbewertung (Umwelt, Sicherheit und auch soziale Aspekte); Produktion: positiv: Programme zur Reduktion des Energieverbrauchs, des Lösemittelverbrauchs und bestimmter Emissionen (z.B. VOC) negativ: relativ hohe Werte bei einzelnen Emissionen (z.B. VOC); verschiedene Fälle von Umweltschäden Sozial: Employees: Laufende Rationalisierungsstrategie mit Personalabbau; Öffentlichkeit: interne Richtlinien bezüglich ungesetzlichen Praktiken (z.B. Korruption); Verlagerung von Arbeitsplätzen nach Asien; starkes Engagement in China ohne klare Positionierung bei Menschenrechtsfragen.

PowerPoint PRES. Presentation Transcript

  • 1.
    • Bank Sarasin & Co.
    • Andreas Knörzer, Head Sustainable Investment
    • 3./4. September 2001
    • SUSTAINABILITY
    • A concept for increasing enterprise value
    • FIDIC 2001 Conference
  • 2. Bank Sarasin & Co.
    • founded in 1841
    • independent Swiss Private Bank
    • specialized in investment advisory and asset management
    • 10 partners with unlimited personal liability
    • 800 employees
    • main office in Base l
    • offices in Zurich, Geneva, Lugano and London
    • Euro 1.7 billion (total assets about Euro 27 billion) are managed according to sustainability criteria
  • 3. Organization Chart Bank Sarasin & Co. Private Banking Institutional Banking Investment Funds Logistics Board of Administration CEO Group Executive Board CFO
  • 4. Contents
    • 1. Sarasin Sustainable Investment
    • Sustainablity Concepts
    • Research and Investment Process
    • Product Concepts
    • Products & Performance
    • Benefits of Sustainable Investments
  • 5.
    • Sarasin Sustainable Investment
  • 6.
    • Market leader in terms of quality
      • Dedicated Sustainability Research and Asset Management since 1989
      • 14 international and interdisciplinary professionals with an average of 7 years’ experience
      • Sophisticated and competent research & assessment process
    • Market leader in terms of quantity
      • € 1.7 billion ( of tot al group assets of ab out € 27 billion) are managed according to sustainability criteria (market leader in continental Europe)
      • Biggest provider of sustainable products in Continental Europe in both absolute a nd relative terms
    Market Leader in Sustainability
  • 7.
    • 1994 launch of «OekoSar Portfolio », the first eco-efficent fund worldwide
    • 1997 co-manager of ethos pension foundation , in cooperation with Lombard Odier
    • 1998 fu nd manager of «OekoVision», the equity fund of Ökobank-Versiko with very strict criteria
    • 1999 launch of «ValueSar», a purely sustainability fund for international equities
    • 2000 launch of « New Energies Invest » (private equity for renewable energies)
    • 2001 launch of Sarasin FairInvest Universale Fund (balanced, Euro based)
    Innovative Produ c t s - successful realisation
  • 8. Sarasin Institutional Banking – Organizational Chart Institutional Clients H. R. Hufschmid Sustainable Investment A. Knörzer Research F. K. von Meyenburg Trading Th. Schaad Institutional Banking F. K. von Meyenburg Asset Management H. R. Hufschmid G. Monson Corporate Finance Ch. Lubicz
  • 9. Sarasin Sustainable Investment: Interdisciplinary research team 8 sustainability analysts with different backgrounds, focusing exclusively on sustainable investment Currently 17 employees Society Finance Technics Ecology Economy
  • 10. 2. Sustainability Concepts
  • 11. Our understanding of sustainability
    • ‘ Sustainable development means a development that meets the needs of the present without compromising the ability of future generations to meet their own needs.’
    • (Brundtland, 1987)
    Society ( social analysis ) Economy ( financial analysis ) Ecology ( environmental analysis )
  • 12. Concepts of SRI Exclusion criteria (e.g. Tobacco, Alcohol) Environmental criteria Environmental and social criteria «Absolute» Sustainability (sustainable products) «Relative» Sustainability (sustainable management) Sustainability Fund (Sarasin) Ethical Investment (USA, UK) Environmental technology Fund Eco-efficiency Fund Sustainability Fund
  • 13. 3. Research & Investment Process
  • 14. Research and Investment Process - Overview
    • I
    • Information gathering
    II Pre-screening (exclusion criteria) III Financial Analysis IV Sustainability assessment V Quality control VI Portfolio construction & Investment Procedure Headquarters of Bank Sarasin & Co.
  • 15. I. Information gathering
    • General company information
    • Monitoring of several hundreds of newspapers through news services
    • Specialized electronic media and i nternet
    • Research reports (financial and non-financial)
    • Company visits and management contacts
    • Information from specialized Swiss and foreign research institutions , NGO‘s
    • (Questionnaire with a total of 140 relevant industry -specific questions )
  • 16. II. Pre-Screening
    • Ecological/social exclusion criteria
      • Generally according to clients’ preferences
      • Sarasin standard products:
      • Production of nuclear energy, armaments, automobiles, chlorine and agrochemicals, pornography, tobacco. G enetic technology is decided upon on a case to case basis
    • Financial exclusion criteria
      • Liquidity (limited tradability)
  • 17. III . F inancial A nalysis
    • Company analysis
    • Quantitative : P/E (absolute and relative to the market and sector), earnings growth, PEG, CFPS, dividend yield, enterprise value/sales, margins, profitability ratios, balance sheet ratios , interest coverage, free cash flow
    • Qualitative rating : Management, product range, earnings visibility, acceptance in the market , sentiment, momentum
    • Economic scenarios
    • Definition of most likely economic scenario
    • Forecasting horizon 3 and 12 months
    • GDP, inflation, interest rates, currencies, equity markets
  • 18. ‚ absolute‘ sustainability axis
    • ‘ absolute’ sustainability of the industry and its technologies
      • C ontribution to environmental & social risks
      • C ompared to other industry sectors
    ‚ relative‘ sustainability axis
    • ‘ relative’ sustainability of a company within an industry
      • Compared to its peers («Best-in-Class»)
      • How well does a company manage its environmental and social risks?
    IV. Sustainability Assessment: principle
  • 19. Absolute Sustainability Assessment
    • The absolute environmental impact of a n industry sector is assessed according to the WBCSD-criteria: e nergy efficiency, material efficiency, toxicity, etc.
    • e.g. Airlines have a high energy consumption , therefore even an efficient a irline gets a low absolute rating .
    • The absolute s o cial relevance of a n industry sector is assessed according to the s takeholder approach : clients , suppliers , employees, investors, etc.
    • e.g. The tobacco and alcohol industries endanger the health of the consumers often at the expense of the general public . This leads to low absolute rating of the whole sector.
  • 20. Example industry rating: Energy Sarasin Sustainability Matrix Industry Rating Company Rating average average high low low high
    • Financial industry classes vs. sustainability classes
    • It is the nature of a company‘s core activities that is decisive
    • Traditional energy companies have a much higher risk exposure than renewable energy companies
    Vestas Chevron Ballard Power BPAmoco
  • 21. Environmental Assessment : Life Cycle Approach Strategy Pre-Production Sourcing Production Processes Products & Services Environmental Management System
  • 22. Environmental Assessment Matrix Targeted accomplishments in % (fictional example) * Targets of the WBCSD Elements Criteria* Pre- P roduction Sourcing Production Processes Products & Services Energy Intensity Material Intensity Less T oxicity Revalorisation More R enewables Durability More Service Intensity 6% 14% 80% 8% 4% 17% 28% 50% 46% 55% 38% 12% 65% 56% 25% 25% 12% 35% 35% 52% 40%
  • 23. Social Assessment : Stakeholder Approach Strategy Suppliers/ Shareholders/ General Public Employees Clients/ Competitors Stakeholder Management System
  • 24. Social Assessment Matrix Targeted accomplishments in % (fictional example) 10% 25% 25% 15% 15% 52% 15% 85% 49% 20% 17% 5% 80% 16% 20% 12% 66% 10% Building-up of Relations Cultivation of Relations Termination of Relations Examined phases Suppliers General Public Shareholders Employees Competitors Clients Stakeholder
  • 25. Example company rating: Unilever (I)
  • 26. Example company rating: Unilever (II)
    • Environmental
      • mature environmental management systems with tough corporate targets
      • focuses on three areas where it can make a real difference : fish, water and agriculture
      • committed to buy fish only from sustainable stocks by 2005 and cooperate with suppliers and NGO's (Marine Stewardship Council)
    • Social
      • Various social and environmental projects in different regions of the world are supported with 1.5% of its world wide earnings.
      • active in developing an understanding the need for responsible and ethical corporate behaviour
  • 27. Valuebuilder: Example
  • 28. Sustainable bond research
    • It is also desirable to manage funds sustainably within the bond market.
    • Government bonds -> Sustainable country analysis
    • Bonds of s upranational i nstitution s -> Sustainable i nstitution al analys is
    • Corporate bonds -> Sustainable company analysis
  • 29. Sustainable country analysis
    • The management of natural and social resources as well as its stability affects the sustainable rating of a country
    • Analysis of the quality of management of ecological, social and human resources
    • Assessment of political and institutional structures
    • Structure and efficient use of resources
    • Absolute level of resources consumption
  • 30. Example: country rating USA 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 Energ y Air Wa t er Soil Biodiversit y Average of all OECD-countries USA 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 Income Health Education C oh e sion Foreign Affairs Human Rights Indebtedness Environment So c ial Average of all OECD-countries USA Stru c tur e a nd e ffi c ien cy of r essource s ineffi c ient effi c ient h igh low Absolute level of environmental a nd s o c ial resource s consumption Switzerland USA Portugal
  • 31. V. Quality Control Company Feedback Third Party Assessment Quality check by external parties Interdisciplinary Advisory Board Internal controlling Client Audits
  • 32. 4 . Product Concepts
  • 33. VI. Portfolio construction Index-based (tracking error) Ecological /so c ial criteria form basis Weighted Sustainability portfolio <Pure> Sustainability portfolio Two principles of Sarasin Sustainable Investment
  • 34. Absolute «pure» Sustainability Portfolio Analysed companies X Companies with activities to be excluded Excluded rating areas Sarasin Fund Universe X X X Company-Rating (Sustainability of the Company within the Sector) Industry-Rating (Sustainability of the Products and Services) low high average low high Sarasin Sustainability-Matrix
  • 35. Investment style for a fully sustainable portfolio
    • Active sustainable investment style (40 – 60 titles)
    • Bottom up > top down
    • Industry- and asset allocation influenced by Sustainability rating
    • Asset allocation solely out of the defined accepted investment universe
    • Title weithting according to financial attractivity (sector, company)
  • 36. Investment style for a fully sustainable portfolio
    • Monthly performance control with benchmark comparison
    • Findings of Sarasin‘s sector- and macro research as well as of the investment committees in Basel and London are included
    • Implementation of the decisions taken within 3 days (depending on volumina)
    • Tactical freedom of the portfolio manager = +/- 1%-point
  • 37. Risk control
    • Daily monitoring
    • Monthly performance review based on SPPS data (Swiss Performance Presentation Standards) incl. analysis of difference to the composite
    • Regular check of compliance with requirements
  • 38. Research-Universe – Country Overview * in bn Euro Countries Number of Companies Mark e t cap.* in % MSCI Euroland 1 79 2‚ 910 85 % Europ e 320 5 ‚ 333 85 % Nor th America 162 7‘443 69 % Japan 3 6 796 3 0 %
  • 39. Research-Universe – Sector- & Country Overview Number of titles – All titles Sectors Europ e Eurozone Europ e ex Euro Amer ica Asi a Total Data networks&process. 0 0 7 0 7 Construction 5 5 1 0 11 Healthcare 6 8 3 0 17 Telecommunication 9 4 5 2 20 Material 3 7 5 0 15 Food & beverage 7 7 14 2 30 Pharma 7 6 9 0 22 Energy 18 4 17 0 39 Utilities 8 11 10 2 31 Electrical eng. & electronics 9 8 7 6 30 Chemicals 15 9 10 1 35 Durable goods 11 8 15 9 43 Machinery&engineering 16 16 6 3 41 Business services 17 13 17 4 51 Finance 33 17 12 4 66 Consumer goods 14 15 21 2 52 Tourism & Leisure 1 3 3 1 8 Total 179 141 162 36 518
  • 40. Limitations due to exclusion criteria 93% Investment Universe Automobile Tobacco Armaments C hlorine /A grochemicals Nuclear Energy Lottery Investable Universe 93%
  • 41. Exclusion criteria does not penalise 2/8/01 1996 1997 1998 1999 2000 2001 60 80 100 120 140 160 180 200 220 240 260 280 MSCI WORLD U$ - PRICE INDEX ( EURO – Net Daily Return ) MSCI WORLD AUTOMOBILES $ - PRICE INDEX ( EURO – Net Daily Return ) MSCI WORLD TOBACCO $ - PRICE INDEX ( EURO – Net Daily Return ) Source: DATASTREAM
  • 42. 5. Product s and Performance
  • 43. Broad Product Range
    • Devif/Special funds
    (SSI)Sarasin Sustainable Investment Own Label F u nds Ethos Managed Accounts Private Equity Sarasin Funds
    • ÖkoVision
    • New Energy Fund
    • Auxvita
    • CH/EU/WW/NA
    • Equities (Int. a nd CHF)
    • Bonds (Int. a nd CHF)
    • Ethosfunds
    • Equities CH
    • DJ Stoxx 50
    • Equities Int .
    • Balanced
    • New Energies Invest Ltd.
    • Sarasin OekoSar
    • Sarasin ValueSar
    • Sarasin FairInvest
    • SAST BVG Sustainability
  • 44. OekoSar Portfolio - Chara c teristi cs
    • Globally balanced : ( End of July 200 1 : 44.3 % Equities , 47.0 % Bonds, 8.7% Cash )
    • Ecological analysis is based on the life cycle concept (eco-efficiency)
    • S ocial analysis follows stakeholder approach and judges the social sustainability
    • Strictly applied negative criteria
    • Interdisciplinary Advisory Board of five
    • One of the leading Continental European funds, with assets of more than EUR 210m (as of 31 July 2001)
  • 45. OekoSar Portfolio - Performance
    • Risk/return p rofil e in Euro
      • Since inception 67.91 % (M arch 1994 – July 2001 )
      • Performance 1999 15.07 %
      • Performance 2000 19.18 %
      • Performance since 01.01.2001 -6.17%
      • Return p.a. 7.24 %
      • Risk p.a. 7.48 %
  • 46. OekoSar relative to Peers Ris k free rate : 3% ... Relative to balanced eco-funds Total Return Sharpe Ratio Total Return Sharpe Ratio Total Return Sharpe Ratio OekoSar Portfolio 19.18 1.79 39.36 0.88 87.11 1.17 Prime Value 3.84 0.12 39.74 1.11 62.14 0.9 8 Julius Baer MI-Fonds Eco A -2.07 -0.59 -- -- -- -- ... Relative to traditional balanced funds (global, neutral AA) Total Return Sharpe Ratio Total Return Sharpe Ratio Total Return Sharpe Ratio OekoSar Portfolio No. 1 of 7 9 No. 1 of 7 9 No. 6 of 4 9 No. 3 of 4 9 No. 9 of 28 No. 2 of 28 Average -1.26 -0. 42 29.1 0.57 78.14 0.89 31.12.99 – 31.12.00 31.12.9 7 – 31.12.00 31.12.9 5 – 31.12.00 31.12.99 – 31.12.00 31.12.9 7 – 31.12.00 31.12.9 5 – 31.12.00 Source: Micropal
  • 47. ValueSar Equity - Chara c teristi cs
    • Only equities , investi ng globally
        • 2/3 in ecologically and socially sustainable blue chips
        • 1/3 in mid-sized sustainable growth companies
    • Focus o n promising future sectors a nd t echnologie s
    • Sustainability criteria according to OekoSar Portfolio
    • Asset allocation offers conservative investors an ideal risk/return ratio
    • Benchmark: 50% MSCI Europ e , 50% MSCI W orld ex. Europ e
    • Assets : about EUR 86m (as of 31 July 2001)
  • 48. ValueSar Equity - Performance
    • Performance Fund in Euro
        • Since inception (June 1999 - July 200 1 ) 24.59 %
        • Performance 2000 18.15 %
        • Performance since 1.1.2001 -10.51%
        • Return p.a 10.68 %
        • Volatility 16.27 %
    • Performance Benchmark
        • Since inception 7.37 %
        • 2000 - 6.76 %
        • Since 1.1.200 1 - 7.57 %
        • Return p.a 3.34 %
        • Volatility 1 6.59 %
  • 49. Active Asset Management pays off (since inception of Dow Jones Sustainability Group Index) * 50% MSCI World ex Europe and 50% MSCI Europe 80% 90% 100% 110% 120% 130% 140% 150% 10/09/99 10/10/99 10/11/99 10/12/99 10/01/00 10/02/00 10/03/00 10/04/00 10/05/00 10/06/00 10/07/00 10/08/00 10/09/00 10/10/00 10/11/00 10/12/00 10/01/01 10/02/01 10/03/01 10/04/01 10/05/01 10/06/01 10/07/01 10/08/01 Performance in EUR O (index ed ) ValueSar Equity Benchmark Dow Jones Global Sustainability Index
  • 50. 6. Benefits of Sustainable Investments
  • 51. Sustainable Companies Outperform Jensen-Alpha vs environmental rating of eco-relevant Industries -0.15 -0.1 -0.05 0 0.05 0.1 0.15 0.2 0.25 0.3 0.35 - - - + + + Alpha Environmental rating Results from Sarasin Study October 1999
  • 52. Performance of European SRI funds Funds Performance as per 30.06.2001 in EURO a) Blue Chip Funds international -1 Year -2 Years -3 Years Sarasin ValueSar Equity -0.81% 30.32 UBS-Eco-Performance -5.67% 23.68% 39.07% Swissca Green Invest -11.18% 9.64% CS Global Sustainability -13.99% 2.14% 4.23% SAM Sustainability-Index Fonds b) -15.76% MSCI Welt Aktien Index -9.75% 8.93% 32.38% Mid / Small Cap Funds international (with large content of «classical» eco-stocks) ÖkoVision c) 12.23% 39.01% 34.60% Activest Lux Eco-Tech 0.93% 33.40% 33.47% SEB Invest Ökolux -6.63% 21.34% 20.81% KD Fonds Öko-Invest -13.80% 36.60% 55.09% Balanced Fund international (with significant bond content) Sarasin ÖkoSar Portfolio 1.02% 22.54% 24.10% Prime Value -0.45% 13.67% 25.47% MI-Fonds Eco -2.00% 5.09% Source: Micropal a) Ranked based on 1 year performance b) Management: Bank Sarasin & C o
  • 53. How sustainable is the food industry?
    • Sarasin Study assessed 18 „conventional“ food companies and 6 organic food producers from US, Europe and Japan
    • Two different peer groups with specific environmental and social issues were identified
    • The focus lay clearly on the pre-production level (i.e. agriculture), where most environmental and social concerns arise
    • A backtracking found – for both groups – that the environmentally and socially most compatible companies strongly outperformed the benchmark (MSCI Food Beverage & Tobacco)
    • To meet the ever increasing demands and environmental & social awareness of consumers will prove decisive for the future success of food companies
  • 54. Food industry: Company ranking
  • 55. Above average conventional companies are outperforming
  • 56. Organic food companies are outperforming