Responsibility goes hand-in-hand with a long-term, partnership approach. To us, it means having a sense of responsibility and integrity not only towards the present generation but also to future generations – and to the real economy and the wider world.
We believe in responsible capitalism and take a holistic view that considers the complex interactions between economy, society and the environment.
We are convinced that Environmental, Social and Governance (ESG) considerations can help us make better long-term investment decisions for our clients.
The strength of our convictions led us to create for our clients a range of innovative environmental and social equity strategies that are among the oldest and largest in the market today, such as Water, launched in 2000.
We believe our role as an institution is about much more than financial returns. We aim to create positive impact in the world through a responsible approach to investment and stewardship that values all stakeholders.
Laurent Ramsey, Managing Partner and Co-CEO
Did you know?
Assets in European sustainable funds reached
1trn
EUR in December 2020, an increase of about 52% from the year before
Source: Morningstar, European Sustainable Funds Landscape: 2020 in Review, February 2021
Responsibility is in our DNA
In the below video, Marie-Laure Schaufelberger, Head of Group ESG and Stewardship at the Pictet Group, explains why our business model and unique governance have created a culture of long-term thinking inherently linked to sustainability. She considers the biggest challenges for the financial industry: we need robust ESG data and a change in the mindset to ensure sustainable practices become embedded in investor thinking.
Learn more about the Pictet Group’s responsible vision and its 10 levers of action:
Responsibility is embedded in everything we do, starting with our investment framework.
1. ESG integration into investment processes and risk management
Integration of ESG factors and sustainability risks have become the norm in our investment processes. Across research, investment decisions and risk management, we include environmental, social and governance factors when evaluating both corporate and sovereign issuers.
2. Responsible products and solutions
We continue to develop investment strategies that provide capital to companies that aim to have a positive impact on society or the environment. We also support those companies that strive to mitigate the negative externalities of their products, services, operations and supply chain.
3. Active ownership
We strive to engage with issuers that fall short of our expectations – either directly or through collaborations with other investors. Where necessary, we will escalate to Board representatives, vote against management or support shareholder resolutions. Depending on the severity of the concern and the issuers’ capacity or willingness to adopt generally accepted standards of best practice, we may choose to sell the investment.
4. Client disclosure
Where relevant data are available, we report on the ESG characteristics of client portfolios and the impact of active ownership activities. Where data are missing, we encourage issuers to report according to international standards.
5. Research and thought-leadership
We are committed advocates of responsible investing and play an active role in supporting organisations that promote responsible finance and sustainable investments. We also see it as our mission to educate investors about responsible and sustainable investment practices, which is why we use our experience across key environmental and social themes to publish targeted research and help raise awareness and capital for a sustainable transition.
Spotlight on our ESG scorecard
At every stage of our research, investment decisions and risk management, we include high-quality environmental, social and governance data when evaluating corporate issuers. We have developed a proprietary ESG Scorecard showing ESG risks and opportunities to inform investment decisions and active ownership activities.
Spotlight on our responsible investing strategies
Our ESG binding strategies (equivalent to Art. 8 SFDR*) consider ESG factors such as sustainability risks and principal adverse impacts, and promote environmental and/or social characteristics.
For those investors looking to have a specific and measurable impact, our positive impact strategies (equivalent to Art. 9 SFDR*) consider ESG factors and target activities that contribute to environmental or social objectives, such as providing solutions to climate change, energy transition or water scarcity.
Responsible investment strategies at Pictet Asset Management
*Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosures in the financial services sector (SFDR).
**ESG factors: sustainability risks and principal adverse impacts
Download the responsible investing brochure to learn more about our approach (only available in English)
Active ownership: proxy voting and ESG engagement activities
As an active manager, we strongly believe that taking account of environmental, social and governance (ESG) considerations can help us make better long-term investment decisions for our clients. Furthermore, we believe in leveraging the power of investors to trigger positive change. This involves exercising our voting rights systematically in the best interests of our clients and engaging directly with the companies we invest in when we have ESG concerns.
In our latest responsible investment report, we present key figures and commentary on our proxy voting and ESG engagement activities. We look forward to continuing our active ownership activities, both bilaterally and through collaboration with industry partners.
We believe that leveraging the power of investors to trigger positive change helps shape a more sustainable form of capitalism.
Eric Borremans, Head of Environmental Social & Governance
Rhône Glacier once was an even more impressive sight, stretching from the top of the so-called Tieralplistock (3,383 m) until far down into the valley.
Climate change is a theme that forms the cornerstone of our engagement programme. We believe that climate change may present material risks to our portfolios and asset values in the short, medium and long term. We, therefore, support the Paris Agreement and the need for the world to transition to a lower carbon economy consistent with a goal of keeping the increase in global average temperature to well below 2° celsius above pre-industrial levels.
Supporting the shift away from coal power generation is also a particular focus. We systematically engage with relevant investee companies with the expectation that they stop investments in new coal assets and establish a low carbon transition plan aligned with the Paris Agreement on climate change.
Engagement with corporate issuers
Through our engagement programme, we focus on corporate issuers with material ESG failings to encourage them to align their policies, practices and disclosure with established industry best practice.
Engagements with 227 companies on 272 ESG topics in 2020
Source: Sustainalytics, Pictet Asset Management, December 2020
Our engagement with companies’ management teams, legal councils and board of directors has helped increase the use of environmental metrics in long-term management compensation targets.
Cédric Lecamp, Senior Investment Manager
ESG in action
German power company on environmental and social issues
We started engaging with this company in early 2019 primarily to press the company to sell off its coal and lignite assets. During the year, the company rotated its assets towards renewables and committed to achieve carbon neutrality by 2040. After multiple bilateral and collaborative meetings (through CA100+), the company made considerable progress on a number of engagement objectives.
Over the course of 2020, we continued to bilaterally engage with the company. Prime achievements include: 1) clarity on decarbonisation targets that are aligned with the Paris Agreement and audited by the Science Based Targets Initiative (SBTI), 2) legal ring-fencing of the coal assets, 3) remuneration policy for senior management and the board that better incorporates ESG targets.
Japanese online games publisher on governance issues
Our Japanese team has consistently engaged with the company to push for better governance practices and improvements to the board. Due to the company’s repeated lack of positive improvement in these areas as well as lack of best practice in others, we have reduced our exposure to the company and put a cap on the potential investment going forward.
Dialogue with sovereign issuers
Brazil
In 2019 our macroeconomic strategist went on a due diligence trip to Brazil to better understand the unique political and economic challenges, as well as gain insight into specific social development issues. Our research showed issues in the quality of spending in education and its diversity and inclusion system. Conversations with the Ministry of Economy show the current administration’s desire to improve Brazil’s business environment and to secure long-term growth for the country. This is an example of the positive feedback loop between improving ESG issues and the overall creditworthiness of a sovereign issuer.
Our ongoing analysis and dialogue surrounding these issues continues away from country due-diligence trips and at times we have an opportunity to act in a collaborative manner with other investors who share our concerns. For example, in 2019 Pictet Asset Management signed an Investor Statement on Deforestation and Forest Fires in the Amazon.
Romania
In September 2020, one of our portfolio managers met with Romanian government officials at a virtual investor roundtable to discuss the country’s focus on environmental targets, specifically the issuance of green bonds. In line with the EU’s efforts on this front via their EU Climate Target Plan 2030, sustainability is rapidly rising in importance as an investment driver to us as fund managers, our end clients and also the wider investor landscape. Romania will also be one of the largest recipients of EU funds within the EUR 750 billion post-pandemic recovery, providing scope for the development of a sustainable bond framework that aligns with the EU’s sustainability aims.
We believe the situation in Romania requires the development of a green framework with specific targets as a first step. Ultimately, we would like to see this in place in the next year, from which they may then consider issuing green bonds.
Collaborative Engagements and Partnerships
Climate Action 100+
Launched in 2017 and led by professional investors, this collaborative initiative engages with the largest global greenhouse gas emitters and with other companies that have significant opportunities to drive the clean energy transition and achieve the goals of the 2015 Paris Agreement.
Investor Initiative for Sustainable Forests
The Investor Statement on Deforestation and Forest Fires in the Amazon collectively calls on companies who are exposed to deforestation through their Brazilian operations and supply chains to redouble their efforts. It also asks to demonstrate a clear commitment to eliminating deforestation and to acknowledge the associated systemic risks.
Mining & Tailings Safety Initiative
An investor-led initiative which was launched in the wake of Vale’s Brumadinho dam disaster in January 2019, the key objectives of the Mining & Tailings Safety are to develop the first public global database of toxic mining waste storage facilities and to create a new, independent global standard in tailings safety.
EMPower
The Emerging Markets Foundation is an organization focused on at-risk youth in emerging market countries. EMpower supports a network of 102 local organizations in 15 emerging market countries who enable young people living in poverty to become educated, productive and healthy adults.
For our Emerging Markets sovereign debt strategies, ESG factors are integrated within country risk models. A targeted dialogue with sovereign issuers is part of our active ownership strategy.
The most successful investors will help steer governments towards the path that boosts their credit ratings, gives them most access to the market and improves the fortunes and potential of citizens.
Mary-Therese Barton, Head of Emerging Market Debt
Exercising voting rights and responsibilities
Farewell to a vanishing giant
As the years are getting warmer, unfortunately the grotto is also melting away faster and faster. The white fabric cannot fully prevent that.
The overarching purpose of our voting is to protect and promote the rights and long-term interests of our clients as shareholders. We consider it our responsibility to engage with and challenge companies’ management to ensure that the issuers we invest in on our clients’ behalf are well-run, adhere to their strategy and deliver shareholder value. We aim to support a strong culture of corporate governance, effective management of environmental and social issues and comprehensive reporting according to credible standards.
The ShareAction report Voting Matters 2020 considering how 60 of the world’s largest asset managers voted on 102 resolutions in the twelve months to August 2020 found that Pictet Asset Management voted at 87% of the resolutions. Of these, we voted on 96% of the resolutions on climate change and 77% on social issues – including voting on 100% of the diversity and human rights resolutions.
Did you know?
Europe and North America account for more than
80%
of the ESG market
Source: J.P. Morgan Global Equity Research, 2020
Read our thought leadership papers and articles
Our research partners include University of Oxford’s Smith School of Enterprise and the Environment, Stockholm Resilience Centre and the Copenhagen Institute for Futures Studies.
Selected insights
Read more content related to sustainable investing.
The sustainable development goals are a set of global social, environmental and economic targets, agreed by the United Nations in 2015 for its member countries.
Initially designed for policy makers and governments, the SDGs are now being embraced by businesses as they try to report on their sustainability efforts and credentials.
In the financial services sector, investors also want to know how the companies in their portfolio are exposed to the SDGs. However, so far, very little standardisation in company reporting is available. Some companies only focus the communication on their own strong points, carry out assessments at a very superficial level or outright “greenwash” their own unsustainable activities.
The 17 goals of the UN's Sustainable Development Goals
Source: UN, 2021
How do we apply the framework at Pictet Asset Management?
At Pictet Asset Management, our thematic investment team identifies investment themes that lay at the intersection of megatrends. Our sustainability-themed strategies follow impact objectives that are captured to an important degree by the SDG framework. Often, our thematic universes have a close link to at least one or more SDGs based on the nature of their investable universe. This allows us to provide a foundation for a viable investment framework despite the inefficiencies of companies’ SDG reporting.
The set of goals outlined can provide a foundation for a viable investment framework despite the reporting and impact measurement challenges. For example, most of the strategies in our thematic franchise are directly aligned with one or multiple SDGs in particular, while having cross-links with other SDGs.
Our investors want to know whether the companies we invest in are helping to build a better future.
Luca Di Patrizi, Head of Intermediaries
Glossary
Active ownership
This refers to investors addressing concerns of environmental, social and governance (ESG) issues by voting on such topics or engaging with corporate managers and boards of directors.
Best-in-class Investment approach based on a sustainability rating in which a company's or issuer's environmental, social and governance (ESG) performance is compared with the ESG performance of its sector peers. All companies with a rating above a defined threshold are considered as investable.
ESG
ESG stands for Environmental (e.g. energy consumption, water usage), Social (e.g. talent attraction, supply chain management) and Governance (e.g. remuneration policies, board governance). ESG factors form the basis for the different responsible investing approaches.
ESG integration
The explicit inclusion by asset managers of ESG (Environmental, Social and Governance) risks and opportunities into traditional investment strategies based on a systematic process and appropriate research sources.
Engagement
Investor-led dialogue with issuers on ESG matters with a view to share potential concerns, seek additional information, enhance public disclosure and/or influence behavior.
Exclusions
An approach excluding companies, countries or other issuers based on activities considered not investable. Exclusion criteria (based on norms and values) can refer to product categories (e.g. weapons, tobacco), activities (e.g. animal testing), or business practices (e.g. severe violation of human rights, corruption).
Exclusionary / Negative Screening
An investment strategy excluding companies, countries or issuers on the grounds of activities considered as not investable. Exclusion criteria can refer to product categories (e.g. weapons, tobacco) activities (e.g. animal testing) or practices (e.g. severe violation of human rights, corruption). They can also be based on personal values (e.g. gambling) or on risk considerations (e.g. nuclear power).
Impact investing
Investments intended to generate a measurable, beneficial social and environmental impact alongside a financial return.
Proxy voting
A ballot cast by one person on behalf of another. One of the benefits of being a shareholder is the right to vote on certain corporate matters. Since most shareholders cannot, or do not want to, attend the annual and special meetings at which the voting occurs, corporations provide shareholders with the option to cast a proxy vote.
Responsible investment
Responsible investment refers to any investment approach, integrating environmental, social and governance factors (ESG) into the selection and management of investments. There are many different forms of responsible investing, such as best-in-class investments, ESG integration, exclusionary screening, thematic investing and impact investing. They are all components of responsible investments and have played a part in its history and evolution.
Thematic investing
Investment in businesses contributing to sustainable solutions both in environmental and/or social topics. In the environmental segment this includes investments in renewable energy, energy efficiency, clean technology, low-carbon transportation infrastructure, water treatment and resource efficiency. In the social segment this includes investments in education, health systems, poverty reduction and solutions for an ageing society.
The Shareholder Rights Directive II is a European Union Directive that aims to promote effective stewardship and long-term investment decision taking. It sets out requirements in several key areas, including the transparency of engagement and proxy voting by asset managers, and regular reporting on the implementation of such activities.
The SFDR is a European Union Regulation that forms part of the EU’s Action Plan to integrate sustainability considerations into its financial policy framework in order to mobilise finance for sustainable growth.
The SFDR lays down disclosure obligations for manufacturers of financial products and financial advisers toward end-investors, in relation to the integration of sustainability risks, and as regards adverse impacts on sustainability matters at entity and financial products levels.
For further details on regulatory disclosures, please refer to our Responsible Investment Policy and Active Ownership report.
A taxonomy is essential at every level, as it will enable businesses to get better access to capital markets to finance their green activities.
Eric Borremans, Head of Environmental Social & Governance
Sustainability reports and policies (available in English only)
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This document is used for informational purposes only and does not constitute, on Pictet Asset Management part, an offer to buy or sell solicitation or investment advice. It has been established on the basis of data, projections, forecasts, anticipations and hypothesis which are subjective. Its analysis and conclusions are the expression of an opinion, based on available data at a specific date. The effective evolution of the economic variables and values of the financial markets could be significantly different from the indications communicated in this document.
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