As an intermediary between investors and businesses and other organizations that need finance, financial institutions can act to ensure that capital is invested sustainably from both an environmental and a social perspective.
LGT endeavors, as an investor and investment adviser, to combine good financial performance with its environmental and social objectives while taking into account the principles of good corporate governance.
LGT’s investment spectrum ranges from traditional investments, responsible investing and sustainable investing, through to impact investing and philanthropy. The video explains what this means.
Ever more private individuals are concerned with sustainability – including when it comes to their investments. For many, investing responsibly is important, they want to know the specific projects and companies in which their money is invested and whether their investments reflect their values. Interest in and demand for sustainable investments is constantly increasing.
With its sustainability funds, LGT invests in companies, organizations and countries that have an outstanding track record for environmental and social criteria and corporate governance and generate long-term financial value.
An overview of the full range of LGT’s sustainable investment products can be found via the following link: Sustainable investments
For private investors, it is often hard to verify whether their own investment or their own portfolio is actually sustainable and to what extent the company and organizations in which they invest act sustainably. It is the task of the financial institutions to create transparency and clarity for their clients.
To help them make a decision when selecting their investments, LGT has introduced for its clients the LGT Sustainability Rating for equities, bonds, funds and ETFs. The rating is performed using our proprietary rating instrument that has been in use since 2009 for the management of the sustainable LGT funds. The sustainability rating is calculated by analyzing companies and countries based on over 20 environmental, social and governance criteria.
The individual investment instruments are awarded one star (unsatisfactory) to five stars (excellent) for their sustainability performance, based on the ESG score they have achieved. This provides clients with easy-to-understand information about the sustainability performance of their investment, enabling them to bring their investments in line with their personal values.
Institutional investors now routinely consider sustainable financial products – and LGT too has been implementing sustainability criteria in its investment business for many years. Since 2003, a clause on the subject of responsible and sustainable investing has been a permanent feature of many of LGT’s investment programs. This enables us to exclude investments that involve significant risks relating to environmental, social and governance factors (ESG criteria). Throughout our Group, we do not invest in companies involved in manufacturing, storing or supplying controversial weapons such as nuclear missiles, land mines, cluster bombs and munitions, or biological and chemical weapons.
We also actively exercise our voting rights for all our equity funds. Our decisions are based on internal regulations and on Swiss and international corporate governance guidelines, such as the UN Principles for Responsible Investment (PRI) www.unpri.org
We introduced our sustainable equity and bond funds as early as 2009. In these funds, ethically controversial activities (e.g. pornography, gambling and tobacco) are excluded from our investment decisions. In addition, we choose securities offered by companies or states that have high sustainability standards. Using our proprietary analysis system, the LGT ESG Cockpit, we rate the corporate governance, environmental and social performance of the various issuers.
Not just individual stocks, but entire portfolios can be examined against sustainability criteria and compared with other portfolios or market indices. One important aspect is the impact of the companies’ business activities on the environment, in particular in terms of greenhouse gas emissions. Investors increasingly want to know how CO2 emissions-intensive their portfolio is and to align their investments with a low-carbon approach.
LGT too measures the environmental footprint of its funds. The following comparison between the LGT Sustainable Equity Strategy and the MSCI World Index shows that the companies in the LGT portfolio have a much less negative impact on the environment than those in the benchmark index.
|GHG emissions to sales
(t CO2 eq./USD m)
|Energy consumption to
sales (MWh/USD m)
|Water withdrawal to
sales (m³/USD m)
|Waste generation to
sales (t/USD m)
|Portfolio exposure||80.1||253||1 924.8||19.5|
|Benchmark exposure||227.5||454.8||13 588.0||639.7|
|Difference in %||-64.8||-44.3||-85.8||.97.0|
Environmental footprint report for LGT Sustainable Quality Equity Strategy (as of 10.01.2017) against MSCI World Index (as of 30.12.2016)
Further information about this subject can be found in the LGT Sustainability Report (PDF)
Impact investing is a form of investing in which a social and environmental return is sought in addition to a financial return. It involves investing specifically in companies and organizations whose business models solve specific social or environmental problems and show significant growth potential. LGT Impact, LGT’s impact investing arm, seeks out suitable companies for such investments.
Philanthropic investments strive for maximum social and environmental returns. This is the motivation behind the investment. No financial return whatsoever is obtained.
The LGT Venture Philanthropy Foundation (LGT VP) was founded in 2007 on the initiative of H.S.H. Prince Max von und zu Liechtenstein. The aim of the foundation is to improve the quality of life of disadvantaged people and create future prospects for them. Through donations, LGT VP supports social organizations and enterprises around the world that offer an effective solution to a social or environmental problem. The transfer of knowledge and access to networks are as vitally important to the organizations as the financial donations.
Tycho Sneyers, Managing Partner at LGT Capital Partners
“For a number of years, LGT has been taking advantage of its leading position as an investor in private equity funds to ensure that the whole sector focuses more on social and environmental values.”