A new investment fund from Ethos and BCV gives private and institutional investors exposure to companies whose products and services support the ecological transition or lessen the impact of climate change. The fund, called BCV FUND (LUX) - Ethos Climate ESG Ambition, is based on Ethos’s positive impact methodology. For both Ethos and BCV, this is the first fund that meets the requirements of Article 9 of the Sustainable Finance Disclosure Regulation.
If our society is to move towards a more sustainable economy with lower greenhouse gas emissions, it is necessary to invest more in innovative companies whose products and services support the ecological transition, reduce greenhouse gas emissions, or mitigate the impact of climate change. These are key aspects of the Paris Agreement and they underpin the decision by Ethos and BCV – partners since 2020 – to set up a new investment fund: BCV FUND (LUX) – Ethos Climate ESG Ambition.
The new fund, officially launched on 25 June 2024, qualifies as an Article 9 fund because it meets the highest standards of socially responsible investing. It only invests in business sectors that contribute to one or more environmental or social objectives without significantly undermining other environmental or social objectives (the “Do no significant harm” principle). The fund must also ensure that companies held in the portfolio apply good governance practices.
The fund is constructed in several stages, starting with a global investment universe of over 2,000 companies. All companies whose products, services, or behavior run counter to the values set out in the Ethos Foundation Charter are excluded from the investment universe. Subsequently, a rating system developed by Ethos is applied to assess the environmental, social, and governance (ESG) practices of the remaining companies; only those that exceeded a certain level have been retained. Lastly – and this is what sets this fund apart – companies must have a positive environmental impact before they can be selected by BCV's fund managers.
These filters are part of Ethos’s Positive Impact Methodology, which was developed in 2022. The methodology identifies what proportion of a company’s revenues can be attributed to each of the seven topics that have been identified as having a positive environmental impact and as playing a crucial role in the transition to a more sustainable economy: sustainable energy; low carbon mobility; sustainable real estate; resilient agriculture, aquaculture, and silviculture; circular economy; sustainable water management; and pollution control. Ethos also has responsibility for exercising shareholder voting rights, in keeping with the Ethos Foundation guidelines.
“We are very pleased to launch this new fund, which will give investors a vector for boosting the ecological transition and combating climate change,” said Vincent Kaufmann, CEO of Ethos. “This fund is based on our Positive Impact Methodology. Only around 100 of the 2,000 companies in the initial investment universe made it through our analysis process. These companies demonstrate a high level of climate ambition and are the only ones that can be selected for the fund portfolio.”
BCV’s asset management team is responsible for analysing the companies’ financials. It identifies the best opportunities in the investment universe through qualitative, fundamental, and behavioural analyses. This exhaustive approach is effective in pinpointing companies with an attractive risk/return profile and in constructing a diversified and balanced portfolio made up of around 50 companies.
Eric Chassot, CIO for Equities and a fund manager at BCV, added: “This new fund gives private and institutional investors a chance to tap into growth opportunities among companies serving markets around the world whose products and services make a direct or indirect contribution to the ecological transition and to combating climate change.”
Ethos and BCV’s strategic partnership began in October 2020, when they joined forces to provide private and institutional investors with sustainable and responsible investment products. This partnership covers six funds, which are managed by BCV Asset Management with Ethos serving in an advisory role, and has led to other jointly developed financial products. In the second quarter of 2024, two new sustainability-related indices developed by Ethos were launched with the SIX Swiss Exchange, one for Swiss equities and the other for Swiss-franc bonds, and two index funds created by BCV were launched to replicate these indices.
