Geneva-based specialist asset manager Quaero Capital has brought its Luxembourg funds into compliance with the new European SFDR regulation on sustainability disclosure, confirming its strong commitment to responsible investment.
While sustainable funds have proven to be superior in terms of performance, the new European directive will effectively combat the “greenwashing” that plagues the industry.
Quaero Capital has classified each of its Luxembourg UCITS funds in the corresponding sustainability category of the SFDR1 regulation. For example, the Infrastructure Securities and Cullen ESG US Value funds fall into the Article 8 category, as both are committed to investing in companies with a strong ESG profile. The Accessible Clean Energy fund is classified as an Article 9 fund because it has a clear sustainable focus on companies that make clean energy available to all and meaningfully contribute to climate change mitigation. Quaero Capital’s other UCITS funds fall under Article 6. However, even for these funds, integration of ESG criteria is a key part of their investment process and all portfolio holdings are, where possible, subject to an ESG assessment. The exclusion criteria, as well as the voting and dialogue policies developed by Quaero Capital are also applied for these funds.
Sustainable investment has experienced an unprecedented boom in recent years, with ESG funds reaching a record CHF 1.5 trillion in 2020, double the amount of the previous year[1]. Unfortunately, this craze has often resulted in exaggerations about the real sustainable nature of funds labelled as such, to the detriment of the “best in class”. The SFDR regulation combats this practice within the EU by controlling these labels and forcing funds distributed in Europe to declare themselves in three categories according to their degree of sustainability.
Quaero Capital has a long-standing commitment to responsible investment, creating its own ESG analysis team and becoming a signatory to the United Nations Principles for Responsible Investment (UN-PRI) in 2015. In addition, Quaero Capital is a member of the Institutional Investors Group on Climate Change (IIGCC) and a signatory to the Carbon Disclosure Project (CDP). It has also signed the statement of support for the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD). Moreover, Quaero Capital scored ‘A+’ for Strategy & Governance in the 2020 PRI annual assessment. For active ownership and for the incorporation of ESG in listed equities, Quaero Capital has achieved ‘A’.
While one might have feared that ethical investors would have to sacrifice performance in order to invest responsibly, in reality the opposite is true. An analysis by Morningstar shows that over the last 10 years, almost 60 per cent of sustainable funds have outperformed their conventional counterparts. And these advantages do not disappear in times of crisis, on the contrary: in 2020, again according to Morningstar, no less than 75 per cent of ESG equity funds beat the average of their peers.
Jean Keller, CEO de Quaero Capital, says: “At Quaero Capital, we consider it our responsibility to conduct our business in a way that has a positive impact, not only on our investors, but also on our employees and society as a whole. This is particularly the case through our active engagement with the companies we invest in, where we encourage and support them to adopt best practice.”
Georgina Parker, Head of Sustainability, adds: “It is very positive to see sustainable investment becoming a major theme, but it was also worrying to see that many products were misusing the ESG label. The new SFDR directive is an important step against greenwashing, separating the wheat from the chaff and promoting a truly responsible approach to investment.”
