A central element of our sustainability approach is the integration of environmental, social and governance (ESG) aspects into traditional financial analysis. zCapital carries out the assessment of the sustainability profile itself and does not rely on external ESG rating agencies. We have one of the largest research teams for the analysis of Swiss equities and are in close contact with executives of companies in the investment universe. The knowledge we have built up over the years forms the basis to comprehensively assess the sustainability of a company.
The structured analysis process is supported by a proprietary ESG monitor which incorporates data from Inrate, ISS, MSCI, RepRisk and Glassdoor. In addition, zCapital collects its own data.
There are products and activities which, in our view, are not compatible with a sustainable investment product. Therefore, the zCapital Swiss ESG Fund excludes manufacturers of controversial weapons. In addition, companies that materially violate the principles of the UN Global Compact or generate more than 5% of sales from the production of nuclear or coal-fired power, coal mining, fracking, oil sands, tobacco, pornography, gambling, armaments or civilian weapons are not invested in. The sales shares used for the exclusions are based on ISS data.
As co-owners of the company, shareholders have a responsibility. We therefore raise shareholder concerns and address relevant ESG issues in over 600 meetings with Executive Board Members each year. The aim is to motivate companies to act sustainably. When necessary, members of the Board of Directors are contacted, written questions are submitted or requests for items to be placed on the agenda of the annual general meeting are made. Increasingly, specific ESG meetings are also held in which zCapital exchanges views with the companies' ESG officers.
zCapital always registers shares in the share register and does not engage in securities lending. Voting rights are exercised consistently. zCapital thereby acts independently. The voting decision is based on internal guidelines and considers both financial aspects and ESG criteria. In the case of companies with weak corporate governance, zCapital tries to use its voting behavior to exert influence and achieve improvements. For example, inadequate compensation systems are rejected. In the case of a board of directors that is not independent, individual non-independent members are voted out.