Sustainable asset management
Sustainable investments are on the rise. Our bank has been involved in this special segment of environmental, social, and governance (ESG) investments for years.
Sustainable investment has become increasingly important in recent years. In Germany, Austria, and Switzerland, for instance, this investment segment recorded annual growth of 30% between 2005 and 2016, reaching about 420 billion Euros in volume.
The Liechtensteinische Landesbank (Österreich) AG already initiated a special investment office in 2010 that has successfully focused on environmental, social, and governance (ESG) investments in a structured way. As part of our sustainable investment process, we can offer the following ESG methods: exclusion criteria, best-in-class approach, and portfolios with an optimised carbon footprint. Depending on individual needs, investors can select or combine a suitable ESG method and implement it in their own investment process.
A compact overview of the three ESG methods
Exclusion criteria: Here, controversial services and products are defined that companies, sectors, or countries may not engage in if they want to remain in the ESG investment universe. Criteria may be defined according to international standards (OECD, UN, ILO) or the investor's own canon of values. Within this framework, controversial services, manufacturing processes, or products can be indexed and excluded. These include animal experiments and industrial agriculture, for example. Arms production and trading, the nuclear industry, or the extraction of fossil fuels and raw materials as well as child labour, production conditions, and ecological product qualities are also generally among the exclusion criteria.
Best-in-class: As part of this approach, the classic ESG criteria (environmental, social, governance) are examined, and the companies with the lowest ESG risks are selected in a targeted manner. In other words, the most positive companies in a sector from the ESG perspective are considered for investment. Since these evaluation factors can vary from sector to sector, individual criteria are examined in the sectoral context – to ensure a fair and transparent evaluation in the end.
Portfolios with optimised carbon footprint: Portfolios with optimised carbon footprint: A sustainable investment strategy can also be implemented and expanded by taking the carbon footprint into account. The sum of the total CO2 emissions of the individual securities in a portfolio is regularly monitored. Depending on investors' wishes, this total carbon balance can be kept below a threshold value by restructuring the portfolio.
A sustainable investment strategy offers additional advantages in addition to ethical and moral aspects: the inclusion of non-financial criteria results in a more comprehensive company analysis. As a rule, this provides an even more holistic picture of individual companies. Company-specific opportunities and risks are also evaluated and examined, which often cannot be determined on the basis of fundamental data. This makes it possible, for example, to identify potential reputational risks or competitive advantages.
In addition, an investment in individually tailored sustainability concepts can also pay off even more clearly in the long term. Companies with a good (already existing) balance between ecological and economic corporate governance are often more future-oriented and sustainable. This is why they often achieve very positive marks when it comes to customer acceptance and loyalty. These companies should therefore also be able to achieve better long-term performance, from which you as an investor can benefit in a targeted way.