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Think of

Sustainability.

Invest Responsibly.


ESG Matters
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What is ESG?

ESG stands for Environmental (e.g. energy consumption, water usage), Social (e.g. healthcare, education) and Governance (e.g. remuneration policies, board governance). ESG factors form the basis for the different responsible investing approaches.

ESG investing started in the 1960s as socially responsible investing, with investors excluding stocks or industries from their investment portfolios in accordance with their business activities like tobacco or nuclear weapons involvement.

Along with standard financial analysis, many investors are now trying to incorporate ESG factors into their investment process.

Why is ESG important?

ESG can allow firms to foster a meaningful change in the global economy, and in the communities in which we live and work. We believe that ESG analysis leads to more effective investment solutions that address global challenges and create sustainable value for our clients.

The integration of ESG factors is used to enhance traditional financial analysis by identifying potential risks and opportunities beyond technical valuations, providing data on issues such as potential reputational risk or identifying firms which are adapting to meet new market challenges. It is important to note that the main objective of ESG integration remains financial performance. 

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
Laurent Ramsey Managing Partner
Did you know? Assets in Asia sustainable funds reached
32.6 bn
USD in June 2022
Source: Morningstar: “Global Sustainable Fund Flows”, 2022.06
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The information and data presented in this material are for information purposes only and are not to be considered as an offer or solicitation to buy, sell or subscribe to any securities or financial instruments in any jurisdiction. Investment involves risk. Past performance is not a guarantee or a reliable indicator of future performance. Before making investment decision, investors should refer the offering documents. The value and income of any of the securities or financial instruments mentioned in this document may fall as well as rise and, as a consequence, investors may receive back less than originally invested. Information, opinions and/or estimates expressed in this material reflect a judgment at its original date of publication and are subject to change without notice. They are not prepared for any particular investment objectives, financial situation or requirements of any specific investor and do not constitute a representation that any investment strategy is suitable or appropriate for an investor’s individual circumstances or otherwise constitute a personal recommendation. Any index data referenced herein remains the property of the Data Vendor. Data Vendor Disclaimers are available on www.am.pictet in the “Resources” section. If in doubt, please seek independent advice.This material has not been reviewed by the Securities and Futures Commission or any other regulatory authority. The issuer of this material is Pictet Asset Management (Hong Kong) Limited.

Responsible Investing

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.

Responsibility is embedded in everything we do

Responsibility is central to our way of thinking. It’s in the way we manage our clients’ investments and in the way we conduct our activities, all with the long-term in mind.

Over the past 216 years since the creation of the Pictet Group, there have been only 45 partners, each with an average tenure of over 21 years. This unique structure as a partnership has given us the stability and the independence to take the long view. In so doing, we consider not just the needs of today’s generation but also those of tomorrow’s.

Our responsible milestones

With the challenges the world is now facing, we need to move swiftly to a more resilient and sustainable economy. For the financial system, we believe this calls for a systemic shift in focus away from exclusively maximising financial returns. Instead, we have to embrace new models that are based on solid science and innovative partnerships and also take account of environmental, social and governance factors in investment decisions and active ownership practices. It also means further developing solutions that redirect capital flows to issuers best positioned to tackle these challenges.

Not only does it help us make better investment decisions for our clients, we take a responsible approach as we think it is the right things to do.

Sébastien Eisinger
Sébastien Eisinger Managing Partner Head of Investments

We are committed to these three ambitions before 2025:

Pictet_graphic_13

The information and data presented in this material are for information purposes only and are not to be considered as an offer or solicitation to buy, sell or subscribe to any securities or financial instruments in any jurisdiction. Investment involves risk. Past performance is not a guarantee or a reliable indicator of future performance. Before making investment decision, investors should refer the offering documents. The value and income of any of the securities or financial instruments mentioned in this document may fall as well as rise and, as a consequence, investors may receive back less than originally invested. Information, opinions and/or estimates expressed in this material reflect a judgment at its original date of publication and are subject to change without notice. They are not prepared for any particular investment objectives, financial situation or requirements of any specific investor and do not constitute a representation that any investment strategy is suitable or appropriate for an investor’s individual circumstances or otherwise constitute a personal recommendation. Any index data referenced herein remains the property of the Data Vendor. Data Vendor Disclaimers are available on www.am.pictet in the “Resources” section. If in doubt, please seek independent advice.This material has not been reviewed by the Securities and Futures Commission or any other regulatory authority. The issuer of this material is Pictet Asset Management (Hong Kong) Limited.

How we conduct our activities and manage client assets

To achieve these ambitions, we have identified 10 levers of action for conducting our own activities and for managing assets on behalf of our clients.

We are convinced that these 10 levers of action will make us better investors and corporate citizens and help us play our part in designing a thriving system for future generations.

Pictet_graphic_10 levers

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Walk the talk at firm level

Some recent initiative
Pictet Group initiatives

Source: Pictet Group, as of 2020.

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.
How are ESG risks integrated into fundamental research and day-to-day investment decisions?
Pictet Asset Management employees share their involvement in responsible investing.

Pictet Asset Management, November 2019

The information and data presented in this material are for information purposes only and are not to be considered as an offer or solicitation to buy, sell or subscribe to any securities or financial instruments in any jurisdiction. Investment involves risk. Past performance is not a guarantee or a reliable indicator of future performance. Before making investment decision, investors should refer the offering documents. The value and income of any of the securities or financial instruments mentioned in this document may fall as well as rise and, as a consequence, investors may receive back less than originally invested. Information, opinions and/or estimates expressed in this material reflect a judgment at its original date of publication and are subject to change without notice. They are not prepared for any particular investment objectives, financial situation or requirements of any specific investor and do not constitute a representation that any investment strategy is suitable or appropriate for an investor’s individual circumstances or otherwise constitute a personal recommendation. Any index data referenced herein remains the property of the Data Vendor. Data Vendor Disclaimers are available on www.am.pictet in the “Resources” section. If in doubt, please seek independent advice.This material has not been reviewed by the Securities and Futures Commission or any other regulatory authority. The issuer of this material is Pictet Asset Management (Hong Kong) Limited.

Active engagement and stewardship 

As committed advocates of responsible investing, we seek to set an example to the industry and markets, encouraging more inclusive thinking around people, the planet and portfolios. To this end, we are involved in a number of industry initiatives, organisations and partnerships. 

Key Initiatives

key iniativas EN vf

Spotlight on our responsible investing strategies

Our ESG focused strategies promote environmental and/or social characteristics. For those investors aiming to achieve an impact, our positive impact strategies target economic activities that are environmentally and/or socially sustainable, such as providing solutions to climate change, energy transition or water scarcity.
RI_SFDR.jpg

ESG integrated is equivalent to an article 6 SFDR and may invest in securities with high sustainability risks. ESG focused is equivalent to an article 8 SFDR. Positive impact is equivalent to an article 8 or 9 SFDR.

SFDR: 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. 

Click here to find a glossary with the main terms. Source: Pictet Asset Management, 31.12.2022. 

Assessing the risk and opportunities

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.
Pictet_graphic_14
Download the latest Responsible Investment Report

The information and data presented in this material are for information purposes only and are not to be considered as an offer or solicitation to buy, sell or subscribe to any securities or financial instruments in any jurisdiction. Investment involves risk. Past performance is not a guarantee or a reliable indicator of future performance. Before making investment decision, investors should refer the offering documents. The value and income of any of the securities or financial instruments mentioned in this document may fall as well as rise and, as a consequence, investors may receive back less than originally invested. Information, opinions and/or estimates expressed in this material reflect a judgment at its original date of publication and are subject to change without notice. They are not prepared for any particular investment objectives, financial situation or requirements of any specific investor and do not constitute a representation that any investment strategy is suitable or appropriate for an investor’s individual circumstances or otherwise constitute a personal recommendation. Any index data referenced herein remains the property of the Data Vendor. Data Vendor Disclaimers are available on www.am.pictet in the “Resources” section. If in doubt, please seek independent advice.This material has not been reviewed by the Securities and Futures Commission or any other regulatory authority. The issuer of this material is Pictet Asset Management (Hong Kong) Limited.

Our Solutions

Making the right choice

Pictet Asset Management has been a pioneer in thematic investment for more than 20 years. It currently offers a range of stand-alone strategies on themes including clean energy,  water, timber, environmental opportunities, nutrition and etc. Our strategies aim to deliver a financial return while also achieving a positive and measurable impact, by investing in companies that provide solutions to increasingly complex sustainability challenges. As of end of September 2022, 9 of our themes are on the HKSFC ESG fund list. 

What would be your main motivation to invest in sustainable strategies?

Responsible investment strategies at Pictet Asset Management

Clean energy

01 Clean Energy Transition

 

 

Clean Energy Transition is increasingly vital to the lives of people, industries and nations across our planet. Clean energy promises a smarter future, not just in power generation, but a range of innovative technologies and applications.

→ Watch the video → Strategy deep dive

02 Global Environmental Opportunities

 

 

Our wellbeing and health is directly linked to our environment. By investing in companies that make a positive contribution to society and the environment we can create better living for all.

→ Watch the video → Strategy deep dive

03 Human

 


Demographic shifts and technological progress have transformed our lives. Consumer-focused services form a powerful and growing investment theme.  

→ Strategy deep dive

04 Nutrition

 

 

Invest in the solutions to help secure the world’s food supply and provide better nutritional value to the global population.

→ Watch the video → Strategy deep dive

05 Smartcity

 

 

Smart cities use technology for sustainability. It will make urban living better, more connected and more sustainable.

→ Watch the video → Strategy deep dive

06 Timber

 

 

Timber is one of the world’s oldest resources. More than ever, this resource has to be managed sustainably. As demand for timber and wood products rises, pressure grows to conserve stocks, and it’s a resource that is likely to increase in value.

→ Watch the video → Strategy deep dive

07 Water

 

 

Next to oxygen, water is the most important life support system of all, however, only 2.5 percent of it is fresh. We believe companies providing solutions to the global water challenge are likely to represent attractive long-term opportunities.

→ Strategy deep dive

08 Global Thematic Opportunities

 

 

Access the best of Pictet Asset Management’s thematic franchise. 

→ Watch the video → Strategy deep dive

09 Global Megatrend

 

 

A single platform that harness the power of megatrends.

→ Strategy deep dive
Disclaimer  The SFC ESG fund list is compiled based on confirmations and representations provided by the respective management companies that these SFC-authorised funds comply with the requirements set out in the circular, which include the name of the scheme, investment threshold, disclosure requirements and ongoing monitoring. The SFC has not independently verified the effectiveness of the investment strategies, investment selection processes, investment portfolios and management or the criteria used to achieve the stated green or ESG investment focuses adopted by these products. The list of green and ESG funds does not constitute an official recommendation of these products or a guarantee of their green or ESG attributes or related performance. The SFC authorisation involves the review of whether a product meets the relevant legal and regulatory requirements, which set out certain impartial benchmarks.The SFC has not independently verified the offering documents and will not be responsible for any error, omission or inaccuracy.

Find the financial advisor

 Distributor Phone Number
   
 Bank of China (Hong Kong) Limited  +852 3988 2388
 China Construction Bank (Asia) Corporation Limited  +852 2903 8343
 Hang Seng Bank Limited  
 Industrial and Commercial Bank of China (Asia) Limited  +852 2189 5588
 Nanyang Commercial Bank  +852 2622 2633
 Shanghai Commercial Bank  +852 2818 0282
 The Bank of East Asia, Limited  +852 2211 1311
 OCBC WING HANG  +852 2815 1123

The information and data presented in this material are for information purposes only and are not to be considered as an offer or solicitation to buy, sell or subscribe to any securities or financial instruments in any jurisdiction. Investment involves risk. Past performance is not a guarantee or a reliable indicator of future performance. Before making investment decision, investors should refer the offering documents. The value and income of any of the securities or financial instruments mentioned in this document may fall as well as rise and, as a consequence, investors may receive back less than originally invested. Information, opinions and/or estimates expressed in this material reflect a judgment at its original date of publication and are subject to change without notice. They are not prepared for any particular investment objectives, financial situation or requirements of any specific investor and do not constitute a representation that any investment strategy is suitable or appropriate for an investor’s individual circumstances or otherwise constitute a personal recommendation. Any index data referenced herein remains the property of the Data Vendor. Data Vendor Disclaimers are available on www.am.pictet in the “Resources” section. If in doubt, please seek independent advice.This material has not been reviewed by the Securities and Futures Commission or any other regulatory authority. The issuer of this material is Pictet Asset Management (Hong Kong) Limited.

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Learning Centre
Did you know?
Asia ex-Japan, of which China is the biggest sustainable market with more than
75%
of the region's asset base, ranked third in terms of sustainable fund market size.
Source: Morningstar: “Global Sustainable Fund Flows”, 2022.07

Do you think ESG may impact investment performance negatively?

Busting 5 ESG investing myths

Myth 1: ESG comes at the expense of investment performance.

 

This is the most common misconception.

An analysis of over 2,000 academic studies on how ESG factors affect corporate financial performance found ‘an overwhelming share of positive results’, with just one in ten showing a negative relationship. Meta studies suggest that in most research papers, there was a positive correlation between ESG performance and corporate financial performance, including stock prices. These provide evidence that ESG issues can be financially material to companies’ performance and potentially to alpha, especially during the pandemic.

S&P analyzed 26 ESG ETF funds and mutual funds with over $250 million in AUM during 5 March 2020 to 5 March 2021, 19 of them beats S&P 500 over the same period. The is just the latest piece of the mounting evidence.

Source: S&P Global Market Intelligence, 2021.04

Myth 2: ESG is a new asset class or new sector.

No, it is not.

ESG are non-financial factors that help investors to identify materials risks and growth opportunities in their analysis process. ESG factors form the basis for the different responsible investing approaches which includes: exclusion, ESG-integration, core standard and best-in-class etc. It applies to all the asset classes across investment decision-making process. 

Myth 3: ESG issues are mostly about environmental issues and climate change.

Not exactly.

As its name tells, ESG covers environmental, social and governance. Through active ownership and different responsible investing approaches, fund managers are able to analyse and assess the companies in their screening process, e.g. the board accountability, human capital, climate change etc.

Myth 4: Only institutional investors invest in ESG.

Not exactly.

In recent years, ESG investing has progressed to cope with the spiraling demand of institutional and retail investors, together with public sector authorities that would like to better integrate financial risks and opportunities into their investment decision-making process, so as to generate long-term value. According to Morningstar, assets in European sustainable funds have surpassed the EUR 1 trillion milestone end of 2020, growth rate was almost 10 times from the past decade. Demand is driven by increased interest in ESG issues from both institutional and retail investors.

When in comes to ESG investing, OECD report shows that institutional investors focused on the benefits of ESG investing for financial returns and risk management, whereas end-investors are more concerned with portfolio alignment with societal values.

Source: OECD, ESG investing: Practices, Progress and Challenges, 2020; Morningstar: European Sustainable Funds Landscape: 2020 in Review, 2021.02.

Myth 5: Impact investing, responsible investing and ESG investing are inter-changeable

No, the three concepts are NOT interchangeable.

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.

ESG investing has been generalized to describe different approach in responsible investing. ESG are non-financial factors that help fund managers to identify risks and opportunities in their analysis process, and these factors form the basis for the different responsible investing approaches.

Impact investing is one of the approaches within responsible investment. It intended to generate a measurable, beneficial social and environmental impact alongside a financial return.

What are the UN sustainable development goals?

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
SDGPoster-2019withoutUNemblem.jpg
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 and other selective strategies 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.

Di Patrizi Luca
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 information and data presented in this material are for information purposes only and are not to be considered as an offer or solicitation to buy, sell or subscribe to any securities or financial instruments in any jurisdiction. Investment involves risk. Past performance is not a guarantee or a reliable indicator of future performance. Before making investment decision, investors should refer the offering documents. The value and income of any of the securities or financial instruments mentioned in this document may fall as well as rise and, as a consequence, investors may receive back less than originally invested. Information, opinions and/or estimates expressed in this material reflect a judgment at its original date of publication and are subject to change without notice. They are not prepared for any particular investment objectives, financial situation or requirements of any specific investor and do not constitute a representation that any investment strategy is suitable or appropriate for an investor’s individual circumstances or otherwise constitute a personal recommendation. Any index data referenced herein remains the property of the Data Vendor. Data Vendor Disclaimers are available on www.am.pictet in the “Resources” section. If in doubt, please seek independent advice.This material has not been reviewed by the Securities and Futures Commission or any other regulatory authority. The issuer of this material is Pictet Asset Management (Hong Kong) Limited.

Trends and Media

Introduction

Public awareness of sustainable investing and ESG (Environmental, Social and Governance) has increased significantly in the past few years and became one of the buzz words. In order to better understand the views and perceptions of potential individual investors towards sustainable finance, Pictet Asset Management has initiated a large-scale ESG sentiment survey in collaboration with the School of Business and Management of The Hong Kong University of Science and Technology (HKUST Business School). It is believed to be first of its kind with focus on broad ESG, targeted retail segment.

Conducted online between 30 December 2021 and 20 January 2022, the HKUST Business School designed survey collected a total of over 3,500 responses across different social demographic sectors.

The survey results came a day before the Hong Kong government opens the first-ever retail green bond subscription.

Download the latest Responsibile Investment Report