Responsible Investing at Pictet Shaping a more sustainable future
Investing for a sustainable world
With more than 200 years of investment experience, Pictet is used to taking the long view. In so doing, we consider not just the needs and desires of today’s generation but also those of tomorrow’s. Developing sustainable investment solutions takes foresight, time and stamina. As the world changes, so too must the way we look at investment as a whole.
“We make a living by what we get, but we make a life by what we give.”
Towards a more responsible form of capitalism
A growing body of investors, from the professional pension provider to the couple saving for their children's education, expect investment managers to incorporate environmental, social and governance criteria into their decision-making processes, alongside traditional financial metrics.
The investor community is a key force for positive change, driving progress, as well as funding new technologies. Pictet and many of our clients are allocating capital to finance the real economy, with the needs of future generations in mind. We are developing a broader view of what we are investing in, establishing a better, more robust process that can deliver strong sustainable returns.
|1980 - Era of shareholder value||2000 - Creating shared value||2020 - Era of responsible capitalism|
|The Environment and Society are secondary to profits.||A realisation that the negative Environmental and Social externalities of economic activities can no longer be ignored.||A new system of value creation. Our economies operate within boundaries of Society and the Environment and externalities need to be fully internalised.|
For Pictet, measuring and sharing the impact of investing is key for bringing the transparency that differentiates true integration from simple box-ticking. To this end, we are concretely integrating Environmental, Social and Governance (ESG) aspects in our investment processes, risk management and reporting practices, and also upstream in our economic research and financial analysis.
The Pictet Group Entities integrate sustainability risks in the investment decision-making process, in investment advice and insurance advice for products they actively manage, subject to product and service specificities and to locally applicable regulations. Across research, investment activities, risk management and advisory services, we place emphasis on the inclusion of high-quality environmental, social and governance data when evaluating corporate issuers. To this extent we have developed a proprietary ESG Scorecard that provides a focused view of both ESG risks and opportunities. Our ESG Scorecard is based on a curated set of the most material data points, across four pillars: Corporate Governance, Products & Services, Operational Risks, and Controversies. Similarly, for external-manager selection we systematically address ESG issues with our investment partners and encourage improvements of current practices, if necessary. We have developed a dedicated ESG questionnaire that covers our investment partners’ engagement to ESG, the level of ESG integration in their processes or operations as well as reporting and transparency issues. Pictet & Cie (Europe) S.A. and branches apply the core tenets of good company ownership, with a focus on the investee company’s corporate strategy, the company’s management team and its effective leadership, its financial strength, its capital structure, the fair valuation of issued securities, sustainability risks & opportunities and adverse impacts of investments on society and/or the environment.
Pictet & Cie (Europe) S.A. considers the principal adverse impacts of investment decisions on sustainability factors in its portfolio management and advisory activities, where relevant, through a combination of portfolio management decisions, active ownership activities and the exclusion of issuers associated with controversial conduct or activities. Consequently, Pictet & Cie (Europe) S.A. and its branches are working to enhance the internal framework in line with Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector by gradually integrating the consideration of adverse impacts on the environment and society in their due diligence processes together with the relevant financial risks and relevant sustainability risks. Therefore, further policy information on the identification and prioritization of principal adverse sustainability impacts will be published in line with the finalization of the applicable Commission Delegated Regulation. This will include information such as the carbon intensity of investments and the severity of social and environmental controversies. Ultimately, this will help reduce these adverse impacts over time.
Pictet & Cie (Europe) S.A. has adopted a Responsible Investment Policy that describes how the Bank integrates sustainability risks in its investment process (ESG Integration), implements responsible investing strategies and performs its active ownership responsibilities on behalf of its clients, in full acknowledgement of their rights as investors and for their benefit. This includes the monitoring of investee companies, proxy voting and issuer engagement.
The Pictet Group has committed and adhered to a number of international and Swiss codes for responsible investment. In addition, as outlined in the Group’s Sustainability & Responsible Ambitions 2025, it is our intention not only to consider but also, where possible, to mitigate material adverse impacts that may exist through our investments and operations. In the area of climate change, arguably the defining issue of our time, the Group has taken a number of steps aimed at driving positive change, fostering the transition, addressing climate risks and excluding issuers. A description of these steps can be found here. We are currently in the process of ensuring all Pictet Group entities are effectively covered by, and adhere to, these commitments. We are also reviewing the data available and defining material metrics for disclosure. We expect to be able to comply by the end of 2022.
The Pictet Group’s EU entities other than Pictet & Cie (Europe) S.A. and Pictet Asset Management (Europe) S.A. adhere to the objectives that Regulation (EU) 2019/2088 sets out with regard to principal adverse impacts but have chosen not to commit to comply for the time being. The main reason for not considering adverse impacts is the lack of sufficient data and data of sufficient quality to enable them to define material metrics for disclosure. The relevant Pictet Group entities intend to monitor the industry position closely and to update their approach in due course as the industry position evolves and further regulatory guidance is made available.
Advocates of responsible investing
We are committed advocates of responsible investing and want to play an active role by encouraging sustainable finance. The industry must be steered towards more inclusive thinking around people, planet and portfolios, because over the long term, they are inextricably linked.
Responsible investment report for 2021 Leveraging the power of investors to trigger positive change
Pictet Asset Management has published its latest Responsible investment report, covering active ownership activities such as voting and engagement. The report includes key figures and commentary on ESG engagement with companies, as well as dialogue with sovereign issuers. It also explains how ESG is integrated in investment decisions, research and thought leadership.
— Find out more
Russia’s invasion of Ukraine continues to cause humanitarian suffering globally. Our thoughts are with those who are directly impacted. We also remain fully cognizant of and committed to both our fiduciary obligations to our clients as well as our obligations under international law.
As such, the investment teams of Pictet are no longer buyers of – or recommending to buy - Russian assets. Whilst legacy positions are held, which are considerably reduced in value, capital controls mean it is currently nearly impossible to sell existing investments. We want to underline that Pictet does not offer any commercial financing or corporate loans across the board.
This is an evolving situation which we continue to closely monitor and the repercussions of this tragic war remain fluid. We will continue to assess our options carefully in light of international sanctions and our fiduciary obligations to clients. With regards to fossil fuels we are committed to actively support the transition to a low carbon economy and achieving net zero GHG emissions by 2050 or earlier, whilst ensuring that our actions do not provide any means to fund this unwarranted and reprehensible aggression.
The thermal coal mining sector has a limited ability to decarbonise and is at high risk of becoming a stranded asset. We therefore categorically exclude companies that generate significant (i.e. >25%) revenue from all actively managed assets. Furthermore, we are exploring additional action as part of our Climate Action Plan which will be published later this year. This will include strengthening our engagement asks, clarifying our escalation process and being more transparent on both for electricity producers.
Since 2011, the Pictet Group has enforced a strict exclusion policy on companies involved in controversial weapons for all its actively managed strategies. Such weapons may cause indiscriminate or disproportionate harm and their use is banned or restricted under international conventions*.
“Index providers need to reflect investor practices and expectations.”
As part of this commitment, in August 2018, Pictet ― who have a seat on the Board of Swiss Sustainable Finance (SSF) ― spearheaded a collaborative initiative together with SSF, aimed at removing controversial weapons manufacturers from mainstream indices and benchmarks.
If such exclusions became embedded in index-construction rules, it would raise the stakes for those companies involved in such activities and promote greater transparency.
Anti-personnel mines: Ottawa Convention (1999)
Cluster munitions: Oslo Convention (2010)
Biological and chemical weapons: Geneva Protocol of 1925, Biological Weapons Convention (1975), Chemical Weapons Convention (1997)
Nuclear weapons: Treaty on Non-Proliferation of Nuclear Weapons (1970)
How Pictet embeds responsible investing
Wealth management ― Aiming to be responsible
By embedding responsible investing aspects at every stage of our value chain, we give our clients a thorough understanding of sustainable issues surrounding the management of their wealth.
Asset management ― A responsible partner
We believe in responsible capitalism and take a holistic view that considers the complex interactions between economy, society and the environment, and are convinced that ESG considerations can help us make better long-term investment decisions for our clients.
Asset services ― Fostering transparency
We are firmly convinced that it is necessary to adopt and promote sustainable investing within our industry. We have therefore included ESG metrics in our reporting practices, both in printed documentation and in our online tool Pictet Connect.
Responsibility at Pictet
Our brochures give a full view of the Pictet Group’s approach to sustainability and responsible investing.