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How to Get from                       SRI to ESG                       Maria Custer Sigrist,                       Vontobe...
Page 2             Sustainable investing             What do we mean and why do we do it?The world is changing rapidly and...
Page 3The problem with exclusion based SRILimits potential   Limits the investment universe   Restricts diversification   ...
Page 4Benefits of an integrated approachFuture focused    Identifies changes in policy & behaviour    Fundamental research...
Page 5Developing an integrated approachKey issues   No ‘one size fits all’   Philosophy                Financial /        ...
Page 6A case study in integration (1)The Vontobel processFundamental and Financial Analysis    In-House Sector ESG Analysi...
Page 7A case study in integration (2)The Vontobel process                                           Minimum Standards Fram...
Page 8ConclusionsGetting from SRI to ESG…    A clear philosophy that is    - based on sound principles,    - relevant to t...
Page 9                            DisclaimerImportant legal notice:This document is for information purposes only and noth...
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How to Get from SRI to ESG - Maria Custer

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TBLI CONFERENCE™ EUROPE 2012 - Zurich - Switzerland

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How to Get from SRI to ESG - Maria Custer

  1. 1. How to Get from SRI to ESG Maria Custer Sigrist, Vontobel Asset Management TBLI, 8 November 2012Performance creates trust
  2. 2. Page 2 Sustainable investing What do we mean and why do we do it?The world is changing rapidly and many sustainability challenges are ahead Health Traffic Social Green Waste and Water and Poverty problems congestion security spaces pollution Energy ESG Integration Thematic Funds
  3. 3. Page 3The problem with exclusion based SRILimits potential Limits the investment universe Restricts diversification Limits performance potential Excluded Restricts active ownership CONTROVERSIAL ACTIVITIES NON-CONTROVERSIAL ACTIVITIES
  4. 4. Page 4Benefits of an integrated approachFuture focused Identifies changes in policy & behaviour Fundamental research enhanced by sustainability perspective Allows greater analysis and interpretation e.g. Pharma Co. Specialist ESG Research provider Proprietary research Environment: Environment Good regulatory control Agree it has high standards Social: Social Fines imposed due to bribes and pricing fraud Violations for old cases - company now has Good access to healthcare new management, codes of conduct and control systems to prevent future incidents Governance: Governance Progressive One of best among peers Rating: Rating: Below average Investable
  5. 5. Page 5Developing an integrated approachKey issues No ‘one size fits all’ Philosophy Financial / investment Values value Strengths Resources Goals and expectations One approach to integrating: target the overlap between value- driven and values-based investing
  6. 6. Page 6A case study in integration (1)The Vontobel processFundamental and Financial Analysis In-House Sector ESG Analysis Minimum Standards Framework 9 critical ESG factors, each scored from 0-10, or F (fail) Environment Social Governance Environment Management System Employees Board independence Environmental considerations Fair compensation Independent diversified board integrated into key processes Training, health & safety Separation of CEO and Chair Systematic targets, monitoring Equality of recruitment Independent auditors Supply chain Social & economic development Shareholder rights Emissions disclosure Code of conduct Disclosure of structure Resource use policies Ethical policy Anti-takeover devices Human rights Founder privileges Products Advertising Executive remuneration Use of life cycle assessment Responsible marketing Transparancy and appropriateness Ecological impact of products Health and content claims, labelling Compensation models link to ESG Packaging reduction and recycling Supplier monitoring Independent compensation committee Average ‘E’ score Average ‘S’ score Average ‘G’ score Average ESG Score >5 to be investable Any F score fails the entire rating Valuation Company ESG Minimum Standard
  7. 7. Page 7A case study in integration (2)The Vontobel process Minimum Standards Framework 9 critical ESG factors, each scored from 0-10, or F (fail)Environment Social GovernanceEnvironment Management System Employee relations Board accountability Environmental considerations Fair compensation Independent nomination committeeintegrated into key processes Training, health & safety Separation of CEO and Chair Systematic targets, monitoring Equality of recruitment Independent auditorsEco-efficient operations Social & economic development Shareholder rights Emissions and water use disclosure Code of conduct Disclosure of structure Waste & resource use policies Ethical policy No anti-takeover devices Human rights Founder privilegesProduct stewardship Supply chain Executive remuneration Use of life cycle assessment Responsible marketing Transparancy and appropriateness Ecological impact of products Health and content claims, labelling Compensation models link to ESG Packaging reduction and recycling Supplier monitoring Independent compensation committeeAverage ‘E’ score Average ‘S’ score Average ‘G’ score Average ESG Score >5 to be investable Any F score fails the entire rating
  8. 8. Page 8ConclusionsGetting from SRI to ESG… A clear philosophy that is - based on sound principles, - relevant to today’s investors. A process that - reflects the philosophy - meets the specific needs of the investors - matches the resources - is continually challenged and improved – there is no holy grail‘.
  9. 9. Page 9 DisclaimerImportant legal notice:This document is for information purposes only and nothing contained in this document should constitute a solicitation, or offer, or recommendation, to buy or sell any investment instruments, to effect anytransactions, or to conclude any legal act of any kind whatsoever. Vontobel Fund is a regulated collective investment scheme under Luxemburg law. Prospective investors must rely on their own examination ofthe legal, taxation, financial and other consequences of an investment in the funds, including the merits of investing and the risks involved. Prospective investors should not treat the contents of thisdocument as advice relating to legal, taxation or investment matters. Before entering into an agreement in respect of an investment referred to in this document, you should consult your own professionaland/or investment advisers as to its suitability for you. The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested. Pastperformance is not a guide to current or future performance. Performance data does not take account of commission or costs charged when units are issued or redeemed. A comprehensive list of risk factorsappears in each fund offering document.Although Vontobel believes that the information provided in this document is based on reliable sources, it cannot assume responsibility for the quality, correctness, timeliness or completeness of theinformation contained in this document. Vontobel explicitly reserves the right to change, amend or delete parts of this document or the document as a whole without further notice. All herein publicizedinformation, particularly share prices, calculation data or forecasts are based on the best knowledge and/or the market estimation as at the date indicated in the presentation. This document may not bereproduced, redistributed or republished for any purpose without the written permission of Vontobel.The Fund and its subfunds are included in the register of Netherlands Authority for the Financial Markets as mentioned in article 1:107 of the Financial Markets Supervision Act (Wet op het financiële toezicht).In Spain, funds authorized for distribution are recorded in the register of foreign collective investment companies maintained by the Spanish CNMV (under number 280). The funds authorized for distribution inthe United Kingdom can be viewed in the FSA register under the Scheme Reference Number 466625.Please refer for more information on the fund to the latest prospectus, annual and semi-annual reports as well as the key investor information documents (KIID). Interested parties may obtain these documentsand the list of benchmarks free of charge from the representative in Switzerland: Vontobel Fonds Services AG, Gotthardstrasse 43, 8022 Zurich, the paying agent in Switzerland: Bank Vontobel AG,Gotthardstrasse 43, 8022 Zurich, the paying agent in Austria: Bank Vontobel Österreich AG, Rathausplatz 4, 5020 Salzburg, the paying agent in Germany: B. Metzler seel. Sohn & Co. KGaA, Grosse Gallusstrasse18, 60311 Frankfurt/Main, from the authorized distribution agencies, the addresses mentioned below and from the offices of the fund at 69, route d’Esch, L-1470 Luxembourg. They may also download thesedocuments from our website at funds.vontobel.com.Further information for UK:This communication is directed only at recipients who are eligible counterparties or professional clients, as defined in the Glossary to the Financial Services Authority’s Handbook of Rules and Guidance. Anyinvestment or service to which this communication relates is only available to and will only be engaged in with such persons. Any other persons who receive this communication should not rely on or act uponthis communication.This information was approved by Vontobel Europe SA, London Branch, which has its registered office at Third Floor, 22 Sackville Street, London W1S 3DN. Authorized and regulated by the Financial ServicesAuthority 464960. Vontobel Europe SA, London Branch belongs to the Swiss based Vontobel-Group.Further information for Singapore and Hong Kong:The Fund and its subfunds are not available to retail investors in Singapore or Hong Kong. Selected sub-funds of the Fund are currently recognized as restricted schemes by the Monetary Authority of Singapore.These sub-funds may only be offered to certain prescribed persons on certain conditions as provided in the Securities and Futures Act, Chapter 289 of Singapore.The Fund is not authorised by the Securities and Futures Commission of Hong Kong. It may only be offered to those investors qualifying as professional investors under the Securities and Futures Ordinance.The contents of this document have not been reviewed by any regulatory authority in Hong Kong. You are advised to exercise caution and if you are in any doubt about any of the contents of this document,you should obtain independent professional advice.This information was approved by Vontobel Asia Pacific Ltd., which has its registered office at 2301 Jardine House / 1 Connaught Place, 1205 Hong Kong. Vontobel Asia Pacific Ltd. belongs to the Swiss basedVontobel-Group.

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