ESG integration is the combination of traditional financial analysis with the analysis of the sustainability of a company. zCapital carries out the sustainability assessment itself. The company has one of the largest research teams for the analysis of Swiss equities and many years of experience. The aim is to identify sustainability risks and opportunities at an early stage. Risks should be avoided where possible, reduced and managed as far as possible.
The integration of ESG analysis takes place at the stock level and aims to identify risks and opportunities at an early stage. zCapital has developed its own ESG monitor for this purpose, which considers data from Inrate, ISS, MSCI, RepRisk and Glassdoor, among others. In addition, zCapital collects its own data.
Compared to the zCapital Swiss Small & Mid Cap Fund or the zCapital Swiss Dividend Fund, the zCapital Swiss ESG Fund has a stronger focus on ESG issues in its portfolio construction.
Exclusions mean that companies with certain activities or behaviours are excluded from the investment universe. The aim of this approach is to reflect fundamental values regarding sustainability in the investment products.
Controversial weapons: zCapital uses the exclusion list of the Swiss Association for Responsible Investment (SVVK), which mainly excludes manufacturers of controversial weapons.
Coal:To curb global warming and achieve the Paris climate targets, a structural change away from coal-fired electricity must take place in the energy sector. zCapital wants to support this change. Therefore, companies which generate more than 10% (5% in the zCapital Swiss ESG Fund) of their turnover from coal mining or the generation of electricity from coal are excluded.
The zCapital Swiss ESG Fund makes more comprehensive exclusions than the other zCapital Funds.
In terms of engagement, zCapital aims to engage with companies and raise shareholder concerns. Through concrete recommendations and exertion of influence, corporate strategy is to be scrutinised, relevant ESG aspects addressed and companies motivated to act sustainably.
zCapital maintains a constructive dialogue with the companies in the investment universe. The contact person is usually at the top management level. If necessary, members of the board of directors are also contacted, written enquiries are made, the opportunity to speak at the general meeting is used or requests for items to be included on the agenda are submitted.
Through participation in investor conferences and meetings with management, zCapital has more than 600 contacts with companies in the investment universe every year.
zCapital exercises voting rights systematically. Voting decisions are subject to the internal guidelines set out in its directive on the exercise of voting and participation rights in Swiss public companies. Voting recommendations from Inrate and ISS, corporate governance analyses from ISS and Inrate, and analyses by internal investment specialists are available as information tools. On this basis, votes are exercised according to the longer-term interests of the public company and the shareholders. In addition to financial aspects, ESG criteria are also considered and specifically promoted with the voting behaviour.
Physical attendance at general meetings is normally waived. The independent proxy is appointed to represent the voting rights.