A strategic (longer-term) investment in an issuer is only possible if strict sustainability conditions are met. The ESG ratings for government bonds, quasi-government bonds and covered bonds are considered based on the data provider MSCI ESG Research, the world's largest provider in this area. To ensure optimal coverage of the bond universe for corporate bonds in view of the increased number of issuers, data from the agencies S&P Global (formerly RobecoSAM) and Sustainalytics are also included.

If an issuer is below the defined limits, a positive ESG rating momentum is a precondition for an investment. This effectively rewards issuers that respond to their weakened sustainability profile with improvement measures. As a result, Bantleon can invest in future ESG leaders at an early stage and benefit from an improving risk profile.

For maximum impact, green bonds are preferred over conventional bonds whenever possible. Green bonds are the only way for listed capital investments to have a direct influence on the use of funds for sustainable projects and thus on the improvement of global environmental conditions. The dedicated proceeds of green bonds flow, for example, into geothermal energy generation systems, the promotion of CO₂-neutral means of transport and the sustainable management of public forests. This is a win-win situation, as the return on green bonds is just as high as that on conventional bonds. To avoid greenwashing, we analyse the respective intended use and only include genuine green bonds with particularly positive ESG characteristics in the portfolios. As a result, every Bantleon bond portfolio is designed to be more sustainable than the corresponding market segment.

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Process of ESG integration in bond strategies

Within our equity strategies, we prefer to invest in the major themes of digital change, demographic change, and renewable energies. These topics directly address social challenges that will accompany investors for several decades. In particular, companies are selected that have a positive sustainability profile and contribute to the achievement of the UN Sustainability Goals.

As different non-financial criteria contribute to the success of a business model depending on the sector, the specific criteria are first defined and weighted at sector level. Subsequently, the criteria with a direct influence on the core business flow into the fundamental analysis of the individual stocks and influence their valuation and weighting. In the process, the individual companies are considered both individually and in comparison to their peers.

ESG analysis is an integral part of the final investment decision and risk management. To this end, we continuously monitor sustainability news and ESG rating changes and stand up for sustainable business practices through regular company discussions and by exercising voting rights.

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Process of ESG integration in equity strategies

Regulatory initiatives are shifting the responsibility on investors and investment managers, while public pressure on large investors is also increasing. In addition, the largest transfer of capital in history is due to take place over the next two decades: worldwide, more than 30 trillion US dollars will be inherited by the younger generation, whose awareness of sustainability is high.

In addition, the EU wants to invest 30% of its reconstruction fund in a climate-friendly way, from which some companies will benefit significantly. In addition, there is the European Green Deal, which aims to make Europe the first climate-neutral continent by 2050. As a result, sustainable companies that shape the key growth themes of the future offer the chance of above-average and stable returns in the long term. The focus on green bonds also benefits more than just the climate: given the increasing demand for green bonds, their total return is sometimes even higher than that of conventional bonds.

We support the international agreements on compliance with the convention on anti-personnel mines (Ottawa Convention) and the ban on cluster bombs (Oslo Convention). Furthermore, Bantleon does not invest in agricultural goods/food, either directly or through derivatives, and thus does not speculate on a shortage that kind of basic needs. Business models with a positive social impact are supported and socially harmful sectors are excluded from the investment universe.

As we are convinced of the benefits of sustainable investment, we already signed the Principles for Responsible Investment (PRI) Initiative in 2013. This commits Bantleon to implementing the initiative's six principles in its own investment processes. The PRI Initiative is an international network of investors in partnership with the United Nations Environment Programme Finance Initiative (UNEP FI) and the UN Global Compact network.

The aim is to understand the impact of sustainable investing and to support investors in implementing it in their investment processes.

For more information on the »Principles for Responsible Investment Initiative«, click here.

As we see ourselves as an active and sustainable asset manager, an active engagement policy is of great importance to us. By exercising shareholder rights, we exert influence on the portfolio companies in order to eliminate deficient sustainability standards, to avoid associated risks and to contribute to a long-term positive performance of the portfolio companies in the interest of the investors. To this end, we not only participate in general meetings, but also regularly discuss topics with company representatives.

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Click here for more details on our engagement policy.