«We are indeed able to track and record more than 210 instances of tangible improvements at the company level since 2006»
20.11.2020
Mr. Habegger, you are one of the pioneers of sustainability investing in Switzerland. When and how did you start?
I was always interested by environmental related topics and my dream as a student at the HSG in St. Gallen, was to launch a company related to renewable energies. The Brundtland report had just coined the term «sustainable development» and in 1996 while still studying, I came across a company called «Sustainable Asset Management - SAM» which was looking for an intern. I applied, was selected as their first employee and this is how I started my career in Sustainable Finance.
The dry spell lasted very long. But for about two years now, there has been no stopping it: all the major fund addresses are jumping on the ESG bandwagon. Do you think that’s good?
This is fundamentally excellent news. A few of us have been fighting for the past twenty years for ESG to become mainstream and here we are now. When a topic becomes mainstream, it means we do not need to argue that it is an important topic anymore. The sustainability challenge is not however solved. The question move from the «why» to the «how». Mainstreaming has allowed the debate to move to the next level: What are the most appropriate ESG investment strategies for each asset class? What ESG investment strategies are best fit to generate superior financial returns and tangible additional impacts simultaneously?
Do you recognise differences in the strategies or do not all do more or less the same thing - simply with a different label on the product?
Exclusions, Best-in-class approach, ESG Integration, Active ownership, Thematic investing, Impact investing, are generally accepted ESG or sustainability strategies. They all share in common that non-financial or ESG factors are considered for the final investment decision. In practice, it is noticeable that these strategies are applied with various level of breadth, depth and scrutiny. Engagement (Active Ownership) and Impact are probably the most abused terms today. Fortunately, the higher level of ESG maturity in the market leads asset owners today to better notice the difference. In particular, asset owners do not look only for the ESG strategies of asset manager but for tangible ex-post transparency reports. The latter reports need to showcase that the expected ESG strategy has effectively been applied and that the expected ESG performance has indeed been achieved.
What makes your company different, how can you differ?
As a fundamentally long-term oriented portfolio manager, de Pury Pictet Turrettini has always considered any factors which can influence the long-term performance. Driven by a culture of innovation and humanist values, it co-founded «Blue Orchard Microfinance» in 2001, the first «impact» labeled fund. In 2006, we transposed the news concepts of intentionality, additionality and impact measurement, which are underlying the «impact» definition, to listed equities. The «Buy & Care» strategy was put into practice in a first Fund, the «Cadmos European Engagement Fund». Four others Cadmos engagement Funds were launched since and they are all able to showcase an amazing financial and engagement track record. The systematic and expert driven engagement approach of the «Buy & Care» strategy, applied to a concentrated universe of future oriented and quality companies, has proven effective in delivering tangible ESG improvements at the company level. We are indeed able to track and record more than 210 instances of tangible improvements at the company level since 2006.
Your Cadmos Funds have been very successful for many years. How do you manage this?
The principle virtue of the «Buy & Care» strategy is that it is driven by the portfolio managers themselves. It is built around them and helps them strengthen their investment convictions. Our portfolio managers own every single investment decision and do not feel constrained or deprived which is sometimes the case with other ESG investment strategies. They are equally responsible for the financial performance and for the tangible ESG impacts. Moreover, they are not subject to sometimes dogmatic ESG rules in particular when the latter will not lead to any alpha or to any tangible positive improvements. We were lucky to have since the launch of the strategy very demanding impact and performance-oriented clients. We provide them since 2006 with a very high level of transparency on all the Cadmos Funds. This transparency control ensures remain faithful to the fundament of the «Buy & Care» strategy. Almost 15 years later, the financial performance of the Camos Funds are probably the most tangible proof that the strategy is making sense.
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Dominique Habegger holds a Master Degree in Finance from the University of St. Gallen (HSG) and has 24 years of dedicated sustainable finance expertise. He joined de Pury Pictet Turrettini in 2013 and created what became the «Buy & Care» investment strategy of the «Cadmos Engagement Funds» to pave the way for the next generation of liquid impact investments. He is a thought leader in Sustainable Finance, Board Member of Swiss Sustainable Finance and vice-president of Sustainable Finance Geneva. Throughout his career that started in 1996 with SAM (RobecoSAM), he has always strived to demonstrate that it is possible to reconcile profitability with responsibility. Lombard Odier hired him in 1998 in order to meet the sustainable finance demand from a large institutional client. With a team of seven, he initiated a pioneer ESG risk rating framework which was first applied to the client’s portfolio. This technique was later used to innovatively integrate ESG risks to standard financial risk metrics and to win first ESG mandates in Europe. To fill the data gap, Dominique Habegger designed in 2003 together with Asset4’s founding team, the first web-based ESG database and modular rating system. Clients and investors like Goldman Sachs and Merrill Lynch onboarded. Asset4 was later sold to Thomson Reuters (Refinitiv) and before joining PPT, Dominique Habegger contributed in developing Ethos’s institutional business and in particular the Ethos Engagement Pool.