Sustainability is an issue that Bellevue Group is taking very seriously. In 2020, highlights included development of the first voluntary UN PRI Report for Bellevue Asset Management AG in April for the year 2019, ESG training sessions for portfolio managers hosted by external ESG providers, and participation in (virtual) ESG conferences, in addition to the development and implementation of a formal investment policy embracing sustainability-related issues.
Important ESG aspects at Bellevue
Companies involved in serious controversies that violate universally-accepted principles on the environment, human rights and business ethics are excluded from its investment process
ESG issues and sustainability-related risks are integrated and addressed at all stages of the investment process
Cooperation with global leaders in ESG research and services
The carbon intensity of Bellevue’s equity portfolios was 30%-50% less than comparable global market indexes as of year-end 2020
Active contribution to UN Sustainable Development Goal No. 3 (Good Health and Well-being) by investing in innovative healthcare companies
Bellevue Asset Management’s first UN PRI report will be published in 2021
In response both to the interests of the investors and to upcoming regulatory requirements, Bellevue Asset Management developed a formal ESG investment policy in 2020 that implements current recognized industry standards. Bellevue Asset Management’s ESG investment policy is in line with AMAS (formerly SFAMA) and Swiss Sustainable Finance Association recommendations (Sustainable Asset Management – Key Messages and Recommendations, June 16, 2020). As well as addressing Swiss regulations for implementation of national sustainable investment guidelines, Bellevue’s investment policy complies with the EU regulations on sustainability, notably the EU Disclosure Regulation, and with other international legislation and regulations applicable to Group subsidiaries operating overseas.
Below is a graphic representation of the company’s ESG investment policy:
Strict compliance with global standards
Bellevue Asset Management pledges to comply with internationally recognized standards and excludes organizations implicated in serious violations of human rights, environmental and labor standards, or cases of corruption. There will be no investment in companies acting in serious contravention of UN Global Compact Principles, UN Guiding Principles for Business and Human Rights, or International Labor Organization standards. Likewise, Bellevue Asset Management systematically abstains from investments in companies associated with controversial weapons.
Unlike exclusions based on violations of global standards, values-based exclusions are rooted in social, ethical and moral principles. Businesses involved in activities generally considered to be controversial according to current social mores will generally be avoided, but they may be screened as a potential investment candidate on a case-by-case basis. Below is a list of industries or business operations that is considered to be ethically or morally controversial:
- The tobacco industry
- Nuclear power
- Thermal coal/energy generation from thermal coal
- Palm oil
- Conventional weapons
- Fracking and oil sands
Company affiliations with animal experiments, medical genetic engineering and embryonic stem cell research may also fall into this category. As a healthcare investment specialist, Bellevue Asset Management applies a nuanced approach in this respect. Their healthcare strategies accommodate generally recognized principles where possible. They categorically rule out investments in companies associated with illegal activities, an example of which would be intervention in the human genome for cloning purposes. However, nowhere in the world can medicines be approved without animal studies, even today. Their healthcare experts prioritize compliance with humane animal research principles in line with the principle of the 3Rs: Replace, Reduce and Refine.
ESG integration refers to the systematic inclusion of environmental, social and governance factors into the fundamental research process and the ensuing assessment of the associated financial risks or opportunities with respect to future stock market performance. This approach gives their portfolio managers a holistic picture of an enterprise. While the aggregate ESG scores generally used for this purpose are taken into consideration, their experts interpret them with caution and exercise critical judgment. Most ESG rating methods are based on a predefined systematic approach which, however, does not always result in an objective or fair assessment of risk. In fact, they tend to systematically disadvantage start-ups and small cap companies relative to their large-cap brethren. A lack of manpower and experience in ESG issues may result in a company being underrated. Another contributing factor is the application of a set of criteria dictated by the methodology that cannot be reliably applied to every company in a given sector. In the biotech industry, for instance, young companies still in the R&D stage may be systematically underrated because they are not yet generating (much) revenue from the sale of medicines, which naturally puts them at a disadvantage versus established healthcare giants in the highly weighted «access to healthcare» criterion. That is why the portfolio managers take an in-depth look at potential or ostensible ESG laggards and always make a point of talking in person to the ESG specialists of the cooperation partners. Accordingly, Bellevue Asset Management does not apply a minimum rating threshold and it will usually not adopt a best-in-class approach (systematic exclusion of companies that score below a minimum ESG rating) when it comes to making investment decisions.
Insights emerging from the above ESG risk assessment also form part of a constructive conversation with candidate companies, which can lead to a company making measurable progress on ESG criteria and hence having their score adjusted upward by the ESG analysts (engagement process). Finally, the long-term interests of investors are protected by making active use of their voting rights at the annual general meetings of the companies in the portfolios of Bellevue Asset Management.
Climate change factors
Bellevue Asset Management endorses the climate goals of the Paris Agreement adopted in December 2015 and supports measures to mitigate global warming. considerable importance to green investment portfolios that can support progress towards the climate goals of the Paris Agreement is attached. Carbon intensity (tonnes of carbon emitted per USD 1 mn of sales) is measured regularly at portfolio level and scored based on the relevant investment universe or fund benchmark. It is worth pointing out that the majority of our investment is in the healthcare sector, which naturally is exposed to comparatively fewer carbon emissions than the industrial sector, commodities or the energy sector. All of the stock portfolios that are managed had 30% to 50% lower end-of-year carbon intensities than the likes of the MSCI World Index or MSCI Emerging Market Index.
Participation in ESG conferences
In addition to the efforts to integrate ESG criteria in the investment processes, Bellevue Asset Management’s experts have been in great demand as speakers at sustainability conferences. ESG leaders at Bellevue Asset Management were invited to join in the discussions at two panel and workshop events during the traditional SUSCON 2020 Sustainability Congress hosted by Drescher & Cie. in Germany.
In terms of sustainability, the new business year will see increased transparency and visibility of the investment-related sustainability profiles at Bellevue Asset Management, as there will be a response from Bellevue Asset Management to the challenging requirements of the new EU regulation on sustainability-related disclosures and the EU sustainable finance taxonomy. The launch of new strategies or realignment of existing strategies to prioritize ESG will be explored, not for regulatory reasons but based on the conviction that dedicated sustainability strategies bring genuine opportunities for a higher risk-adjusted yield while enhancing the fund profile.
On a corporate level, Bellevue Group will work with SwissClimate AG, a leading climate/ESG consultant in Switzerland, to establish our Group’s first carbon footprint. 2021 will also see the publication of the first UN PRI Report for Bellevue Asset Management AG.
BB Adamant Sustainable Healthcare Fund
Bellevue Asset Management AG brought the world’s first sustainability-themed healthcare investment fund to the market with the launch of the BB Adamant Sustainable Healthcare Fund in the summer of 2018.All about the fund