Luca taiana


Published on

Measuring the impact of investments remains a main challenge for sustainable finance professionals and, together with Climate Change, an overarching theme at TBLI. Sixteen related workshops offer debate on ESG and Impact Investing trends, private equity, portfolio strategy, food production, emerging markets, sustainable energy or philanthropy investing.

Published in: Economy & Finance, Business
  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Luca taiana

  1. 1. Global UHNWI TBLI 2013 Conference Integrating ESG in Portfolios Practical application - Portfolio analysis Luca Taiana Advisor Values-Based Investing November 2013 PUBLIC To the attendees of TBLI 2013 conference. Not for further distribution
  2. 2. The agenda Integrating ESG in portfolios: Advisory process and value chain Step 1 Understand your client Step 4 Decide where to invest Step 2 Measure ESG factors Step 3 Screen the portfolio 1
  3. 3. Step 1: Understand Discussion to understand the client's investment goals, values and interests Industries Product safety Carbon emissions Labor mgmt Corporate Governance Key issues Supply chain labor Energy efficiency Water stress Raw material sourcing Data security 2
  4. 4. Step 2: Measure ESG factors UBS methodology: from relative to absolute rating Sustainability performance MSCI ESG: Intangible Value Assessment (IVA) AAA AA A BBB Best-in-Class A A B C UBS VBI Sustainability Rating: A B B C D B C D C Low D Moderate E High Unsustainable E B CCC Worst-in-Class Very highly exposed D BB Underperform Highly exposed E A Moderately exposed C Good Sustainable E Very high Sustainability risk Exposure of a company to operational and reputational sustainability-related risks based on industry and company specific exposure. Combining best-in-class external research with internal experience Source: MSCI ESG Research, UBS 3
  5. 5. Step 3: Screen Example of an average sustainability profile VBI-Ratings of overall portfolio Liquidity 12% not rated 2% A 27% UBS VBI Sustainability Rating: Highly exposed D Very highly exposed E C 17% Moderately exposed C D 6% Sustainable B E 8% A Unsustainable B 27% Source: MSCI ESG Research, UBS 4
  6. 6. Step 3: Screen Portfolio Distribution Distribution of top companies and issuers 3.7% Software & IT company Sustainability Performance 6.6% Specialty Chemicals company 0.0% Integrated Oil & Gas company 19.8% Electrical Equipment company 13.4% 1.8% Non-Precious Metals company 0.3% Telecommunication company 3.4% Apparel & luxury Goods company 2.2% 0.4% Good Pharmaceuticals company 2.4% Best in Class 21.2% 2.3% 4.1% Energy Equipment company Health Care company Underperform Worst in Class Broadcasting company Tobacco company Low Food Products company 3.8% Automobiles company Moderate Multi-Utilities company 0.5% Precious Metals company High Very high Sustainability Risk A Sustainable B Moderately exposed C Highly exposed D Very highly exposed E Unsustainable % Weight distribution Source: MSCI ESG Research, UBS 5
  7. 7. Step 3: Screen VBI rating per pooled vehicles: Some funds have a considerable share of high risk companies 8% Europe 7% Emerging Markets 6% Percent age Port f olio S&P 500 ETF SMI 5% 4% China 25 3% 2% 1% 0% Fund A Fund B Fund C Fund D Fund E A Fund F B Fund G C D Fund H E Fund I Fund L Fund M Fund N Fund O not rat ed Source: MSCI ESG Research, UBS 6
  8. 8. Step 4: Decide – portfolio switch suggestions International funds Replacing UBS-ETF MSCI Europe with UBS-ETF MSCI SRI Europe Existing position UBS-ETF MSCI Europe Sustainable alternative Comment Several very high sustainability risk companies UBS-ETF MSCI Europe & Middle East Socially Responsible Percentage portfolio 100% Integrated Oil & Gas company Non-Precious Metals company Energy Equipment company Multi-Utilities company … 50% 0% Source: MSCI ESG Research, UBS A B C D E 7
  9. 9. Step 4: Decide – portfolio switch suggestions Competitive returns For illustrative purposes only. This information should not be considered as a recommendation to purchase or sell any of these funds. Past performance is not an indication of future performance. The value of the Fund may fall as well as rise and investors may get back less than they originally invested or even zero. The performance shown does not take account of any commissions and costs charged when subscribing to and redeeming units. If the currency of the Fund is different from your reference currency, the return can increase or decrease as a result of currency fluctuations. Source: MSCI ESG Research, UBS 8
  10. 10. Conclusions Integrating ESG in portfolios creates a win-win situation for you and for your clients Align clients personal values and beliefs with investment decisions Step 1 Understand your client Step 4 Decide where to invest Create investment options with similar risk/return profiles and incorporating ESG Create more awareness of ESG in the investor community Step 2 Measure ESG factors Step 3 Screen the portfolio Provide transparency 9
  11. 11. Contact information Luca Taiana Director, Values-Based Investing Talaker 21 8001 Zurich +41 44 237 51 74 10