responsAbility and ESG-AM are creating a net zero emissions fund

The strategy will allow institutional and private investors to invest in climate change without compromising financial performance.

Impact investing has until now been almost exclusively reserved for non-listed markets. This situation is changing thanks to the commitment of Swiss sustainable investment company responsAbility and ESG Asset Management (ESG-AM). The fund, which has been authorized for public distribution since June 23, 2022, will allow institutional and private investors to invest in sectors related to climate change without compromising financial performance. Its sustainable development strategy, structured in the form of funds in accordance with Article 9 of the European Union SFDR Regulation, is characterized by the achievement of clearly measurable climate goals.

The focus is on companies that are taking credible steps to significantly reduce CO2 emissions2 and achieve long-term carbon neutrality. About 70% of the bonds in the initial portfolio are in the industrial sector, whose impact on reducing greenhouse gas emissions is by far the most important. Almost 25% of bonds are in the financial services sector and about 5% in the utilities sector. In terms of country allocation, the US (around 40%), the UK (13%), Germany (9%) and France (8%) make up the bulk of the portfolio. Switzerland is represented by a small number of bonds, including from Holcim, an issuer that exemplifies the Transition to Net Zero Bond Fund’s consistent approach to sustainable development.

Holcim, the innovative engine for zero net emissions

Cement, which is one of the main building materials, is responsible for about 7% of CO emissions2 in the world. Most of the emissions come from the decarbonization (reduction in carbon content) of limestone and the high temperatures required for the manufacturing process, which is usually the result of burning fossil fuels.

As an innovative Swiss building materials company, Holcim is a force for change in the sector by developing new types of cement, increasing the use of waste-based fuels and operating pilot plants that capture the inevitable carbon emissions. . Thus, the cement group Holcim, which is following a specific net-zero emission reduction path, is a good example of a company targeted by the strategy.

Strong demand from institutional investors

Initial financing for the launch of the Transition to Net Zero Bond Fund was provided by German and Swiss institutional investors. Demand from institutional clients remains strong, particularly from pension funds, banks, insurance companies, family offices and fund managers who support a climate change strategy.

For Stephanie Bilot, responsAbility’s chief client and investment solutions officer, it’s clear that “the urgency of decarbonisation requires investors to take robust action. However, the most common approach at the moment – ​​excluding companies – appears to be too limited. Excluding high-carbon sectors from investing may seem like an obvious solution, but it falls short of the desired goal. On the contrary, it is important to include companies from these sectors. With influence investors, it is indeed possible to set incentive targets for companies that generate high greenhouse gas emissions to take effective measures to reduce them. This leads to a significant leverage effect that can significantly reduce carbon emissions and take a big step towards carbon neutrality.”

And Philip Hood, CEO of ESG-AM, added: “Our portfolio is focused on issuers across all rating categories with an average initial rating of BBB that have identified specific climate change issues and are systematically addressing them. From an investment universe of around 750 issuers, we select 100 bonds that additionally have an attractive risk-return profile, while targeting a US dollar yield of more than 5.5%. We are convinced that we can achieve interesting results both financially and sustainably.”