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Monthly Archives: November 2018

The Results of the Impact Report

Impact report: the new way to see the investment

Impact report by Etica Sgr: a novelty made in Etica Sgr. What is it?

Let’s start with a photograph of the world of savings: socially responsible finance is no longer a niche issue, today it is mainstream and   meets the sensitivity of an ever-wider audience .

This is because today’s investors are no longer just content with their returns but are expecting more from their investment. For example, know what their savings are and if their choices have a socio-environmental impact.

Responsibility and performance are therefore two interrelated factors for an ever increasing number of investors, also because the idea that investments chosen with a rigorous social, environmental and good governance method are able to produce good long-term performance are now accepted. a lower risk .

The impact of the investment

Why is it important today to be aware of your investment choices ? They are now known to all the risks that threaten the planet and the legal and reputational consequences that would result from insufficient attention to the problem, in addition to the consequent financial damage .

Not to mention that the social and governance aspects have the same importance as the environmental aspects in determining the impact of a company and its possible exposure to business risks / opportunities.

At Etica Sgr we are convinced that investing according to environmental, social and governance criteria and being able to measure the effects and achievements achieved with respect to the market represent an important integration of value . To respond to this need and to have maximum transparency towards our customers, the Impact Report was born (find out immediately ).

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Etica Sgr publishes the first impact report

Etica Sgr has decided to be an active part in this action program, reinforcing the sustainability analysis .

Such as? Through the calculation of the impact of their equity investments, to grasp the link with the real economy. With this in mind, Etica Sgr has published the first Impact Report (find out now ), which measures the environmental, social and governance sustainability of the companies in which the Ethical Equity fund invests in relation to the market (as reference ETF iShares Msci ACWI , fund benchmark proxy).

The results

The Impact Report takes into consideration a set of indicators consistent with the Sustainable Development Goals (SDGs) of the UN agenda, bringing out excellent results.

The results of the Impact Report: the companies in which Etica Azionario invests have a positive impact higher than the reference market, which amounts to:

  • 43% more in the environmental field,
  • 28% in the social sphere,
  • 21% in terms of governance .

This is an important milestone, but at the same time an important starting point for strengthening the effectiveness of our company selection process.

Sustainable investments reduce the risk

Responsibility for investments is an opportunity . Just think about the reduction of waste and waste ,   the development of environmental quality management systems , the implementation of policies on equal opportunities .

All these issues have now become real competitive factors of investment and are increasingly integrated into risk management.

How much is the impact investment market worth?

The impact investment market is gaining more and more momentum globally. According to Eurosif, it is the fastest growing category in SRI strategies and worth € 98 billion in Europe, up by 385% compared to € 20 billion in 2013 [1] .

According to the Global Impact Investing Network , the 208 largest global institutions (Fund managers and Foundations) that contributed to the realization of the last survey in 2017, manage 114 billion of assets in impact investments [2] .

The United Nations: 17 Goals for sustainable development

Finance today plays a decisive role in promoting sustainable development, a crucial goal of the UN 2030 Agenda. The 2030 Agenda is an action program signed by the governments of 193 UN member states that sets 17 common goals for international development .

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Investing responsibly would speed up sustainable development. This is demonstrated by the study ” Better business, better world ” of the Business and Sustainable Development Commission according to which setting sustainable development objectives at the center of global economic strategy would mean creating new business opportunities by 2030 for a value of 12 thousand billion dollars.

Etica Sgr engagement, voting and dialogue with companies

What is engagement in the world of investment? By the term engagement we refer to the activity of dialogue between investors and businesses and the exercise of voting rights in relation to our equity investments.

The aim of engagement is to establish a continuous and constructive dialogue over time on the questions of sustainability and social responsibility.

Engagement activities in 2017

Let us look in detail at how Etica Sgr engagement developed in 2017.

Voting: shareholder activism

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In 2017 Etica Sgr directed its shareholder activism at 17 firms, of which 11 Italian, 3 Japanese and 3 American. Etica Sgr is committed to physically attending the shareholders’ meetings of all Italian companies in which its funds invest. This is a vital aspect of building an increasingly fruitful dialogue with the boards of directors.

Particular attention was given to the sphere of governance in relation to the following issues:

  • Gender diversity in terms of the number of women on boards of directors;
  • Remuneration policy;
  • Independence of the members of the Board of Directors;
  • Policy on dividends;
  • Purchase of own shares.

Dialogue with the companies

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Etica Sgr’s dialogue activities set out to influence and drive businesses towards best practices and sustainable behaviours.

This is why activism is not limited to the companies in which the funds invest or which make up the Investable Universe.

Dialogue can go beyond this to involve other firms, especially together with international networks of responsible investors with whom Etica Sgr collaborates. The strategic areas of dialogue that Etica Sgr has identified are:

      • Climate change.
      • Human rights in the supply chain.
      • Tax optimization.

Why does Etica Sgr believe in engagement?

Etica Sgr has always been committed to furthering sustainable and responsible investment and views engagement as an indispensable and strategic part of its work. Engagement is not limited to the shareholders’ meetings at which we exercise our voting rights, but is built by continual dialogue throughout the year. We use precise targets to measure progress over time, through a patient process of pointing out to firms the opportunities, even in business terms, of increasingly responsible behaviour, adapting corporate practices to ongoing environmental and social change.

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Our efforts are aimed primarily at urging them to think about and act on environmental, social, governance issues, and for this reason we try to take the path towards improvement together with our corporate interlocutors. This is especially important today, when governments, companies and the public are called to do more to achieve sustainable development.

The importance of this area for Etica Sgr was confirmed by the creation in 2018 of the Corporate Engagement and Network Manager to oversee the work on sustainability carried out by Etica Sgr either independently or together with the national and international networks to which it belongs.

Etica Sgr, engagement and SDGs: united we are stronger

At 2017 shareholders’ meetings Etica Sgr chose for the first time to associate the issues addressed in our engagement activity with the United Nations Sustainable Development Goals to try and stimulate dialogue with firms on the broader, globally shared question of sustainable development.

These Goals commit the governments of the 193 Member States of the United Nations to promote sustainable development around the planet, touching issues such as health, education, gender equality, combating famine and poverty and environmental safeguards.

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What are the main issues tackled by Etica Sgr?

To learn more, click on the following items.

Corporate governance

The question of corporate governance covers issues such as the independence of the Board of Directors, the separation of the Chairman of the Board and the Chief Executive Officer/Managing Director, the gender diversity of the board and remuneration systems.

These issues are central to Etica Sgr’s analyses because a well governed company is more likely to achieve strong financial results in the long-term.

GOAL 5: Gender equality

Achieve gender equality and emancipate all women and girls. The principal barrier to change is the persisting gender gap, seen in the fact that women are often still under represented in managerial positions or paid less for doing the same job.

GOAL 8: Decent work and economic growth

Incentivise lasting, inclusive and sustainable economic growth, full and productive employment and decent jobs for everyone.
Regarding Sustainable Development Goal number 8, Etica Sgr has been actively involved in the governance issues relating to corporate remuneration.

GOAL 12: Responsible consumption and production

Ensure sustainable consumption and production patterns. One of the aims of Sustainable Development Goal number 12 is to encourage businesses, in particular large multinationals, to include information on sustainability in its annual statements.

Commitment to tackling climate change

Etica Sgr has long taken an active interest in climate change, excluding from its investments those industries with a particular impact in terms of gas emissions such as petroleum or mining, preferring to invest in environmentally friendly companies. Etica Sgr’s engagement activity reinforces and amplifies its efforts as a sustainable and responsible investor, encouraging the companies in which it invests to adopt more efficient strategies in line with the Sustainable Development Goals linked to climate change.

GOAL 6: Clean water and sanitation

Ensure that sustainable water management and hygiene/sanitation systems are available to everyone. The United Nations is calling for a more responsible use of water resources. The goal is to achieve adequate and fair access to hygiene and sanitation for everyone, reduce pollution and protect and restore water-related ecosystems.

GOAL 13: Climate Action

Promote action to combat climate change at every level. Climate change is a global challenge that knows no bounds. Greenhouse gas emissions caused by human activity are currently at their highest levels in history. Against this background Etica Sgr is committed to driving companies towards a low carbon economy, pressing for emissions reporting and reduced consumption, and the development of renewable energies.

GOAL 15: Life on land

Protect, restore and encourage sustainable use of the ecosystem and forest management, combat desertification, arrest land degradation, and halt biodiversity loss. The United Nations believes that it is important to mobilize sizeable financial resources to preserve biodiversity and ecosystems. Etica Sgr is therefore urging companies to adopt responsible wood procurement policies, reduce deforestation by suppliers of palm oil and policies that are friendly to wild animals.

Human rights in the supply chain

The question of human rights is of vital importance, especially in countries with slack legislation, where many businesses often operate through their suppliers. Etica Sgr has always focused attention on respect for human rights in the selection and monitoring of the supply chains of the businesses in which it invests. Engagement activism tries to raise awareness among company boards of the values of social and environmental responsibility also with respect to their suppliers. It is important to incentivise the monitoring of internal processes through for example supply chain audits to prevent episodes of discrimination or exploitation like child or forced labour.

GOAL 8: Decent work and economic growth

Incentivise lasting, inclusive and sustainable economic growth, full and productive employment and decent jobs for everyone. For Etica Sgr a sustainable supply chain is both necessary and at the same time extremely rewarding. Etica Sgr occupies the front line in campaigns against human rights violations, drawing firms’ attention to their supply chain policies and recruitment practices to protect respect for the environment and human rights along the whole chain.

GOAL 16: Peace, justice and strong institutions

Promote peaceful and more inclusive societies for sustainable development; offer access to justice for all and create efficient, responsible and inclusive bodies at every level. The United Nations is calling for governments to reduce illicit flows of finance and weapons and step up measures to combat all forms of organized crime by 2030. It is vital that national institutions are strengthened, even through international cooperation, to enable them to prevent violence and combat terrorism and crime.

Tax optimization

Investors are increasingly taking an interest in the conduct of the companies in which they invest. As a consequence, companies have a strategic interest in reconciling economic growth with a fair distribution of resources, managing their tax affairs transparently and in accordance with the law, adequately rewarding all stakeholders, and fully disclosing all their activities.

GOAL 10: Reduced inequality

Reduce inequality within and among countries. Reducing national and international inequality is probably one of the world’s most challenging goals, because the poorest countries have few means available to improve their situation. Sustainable Development Goal 10 draws attention to this issue measured by various indicators including the social, economic and political inclusion of citizens. Reducing inequality is also especially important in that, beyond a certain threshold, it is damaging to economic growth

Balance 2014: A Record Net Profit of 1.8 Million

Balance 2014: A Record Net Profit of 1.8 Million

Etica Sgr closes the 2014 Balance project with record net profits of 1.8 million euros (+173%)

A dividend of 2.5 euros per share is proposed. The assets of the funds at the end of the year amount to 1.3 billion euros

  • Gross profit amounts to 2.8 million euros (+136% compared to 2013), active commissions to 13.7 million (+79%) and the intermediation margin is 5.8 million (+67%).
  • The management committee of Etica Sgr proposes to the shareholders the distribution of a dividend of 1.1 million euros, equal to 2.5 euros per share.
  • The net fundraising of the Valores Responsables funds in 2014 closes to +466 million euros. The managed assets amount to 1.3 million euros (+70%).
  • The number of clients (active positions) exceeds the figure of 68,000 (+77%). Etica Sgr is confirmed as the first operator in the sector of ethical funds, with a market share of 42% (Assogestioni data as of December 31, 2014).
  • Active shareholder: interventions in the boards of 27 companies (ten of them Italian) present in the portfolio of the funds.
  • The guarantee fund for microcredit in Italy amounts to 1.3 million euros for 2015.

The Board of Directors of Etica Sgr, the asset management company of the Banca Popolare Etica group, approved the 2014 Balance sheet project, which registered net profits of 1.8 million euros (+173% compared to 2013). The active commissions amount to 13.7 million euros (+ 79%), while the intermediation margin amounts to 5.8 million euros (+67%). The gross benefits amount to some 2.8 million euros (+ 136%). For the third consecutive year it is proposed to distribute a part of the benefits to the partners: the proposed dividend is 1.1 million euros, equal to 2.5 euros per share (last year it was 1 euro per share). The 2014 Balance Project and the distribution of benefits will be presented to the Shareholders’ Meeting, which will be held on April 29, 2015, for approval.

« 2014 closed with very positive results for Etica Sgr. The assets managed by the Valores Responsables funds reached 1.3 billion on behalf of more than 68,000 customers. A historic milestone for Ethical Finance, which confirms once again that there is a growing interest on the part of Italian savers in finance attentive to the social and environmental consequences, ” says Ugo Biggeri , president of Etica Sgr. ” The results show how a careful composition of the investment portfolio carried out by selecting the companies and the states that have the best results in terms of social, environmental and government attention, determines good results and considerable interest on the part of investors. We are also very satisfied with the social and economic impact we are developing through active shareholding and microcredit. “

« Only in 2014 the company has already focused on the objectives of capturing the three-year plan», adds Alessandra Viscovi , general director of Etica Sgr. « These give us strength to continue our work of promoting Ethical Finance with even more enthusiasm, settling in the Italian market as a leader in the sector. In particular, we are studying new products and services that we will be launching during the year in order to further boost the development of responsible finance. “

Active shareholder in 2014

In 2014, the active shareholder activity continued to grow: Etica Sgr voted at the shareholders’ meetings of 27 companies, ten of them Italian. ” We have intervened specifically on environmental issues such as global warming, environmental monitoring of the supply chain, the use of environmental parameters in the calculation of management remuneration, the use of water and sustainable food,” says Leonardo Becchetti , president of the Ethics Committee. ” In addition, issues related to human rights and social and environmental reports have been addressed.”

The patrimony and the clients grow

In 2014, the net collection of the Valores Responsables funds was 446 million euros , while the managed assets grew to 1.3 billion euros (+70%) . There was also a significant increase in the number of clients (active positions), which at the end of the year exceeded 68,000 (+77%). The PAC instrument was a great success, and thanks to different campaigns supported by some investment agents, it was chosen during the year by more than 18,900 savers, with the total number of PACs active at the end of the year exceeding 34,000 According to the latest findings of Assogestioni (as of December 31, 2014), Etica Sgr is the first operator in Italy in the field of ethical common funds, with a market share of 42%.

Acquisition of Etica Sgr vs open funds market in Italy.

Data as of 12/31/2014. Source: Etica Sgr processing based on data from Assogestioni.

Support for microcredit in Italy

The good evolution of the 2014 uptake has made it possible to increase aid to the real economy and to small entrepreneurs in Italy, increasing the assets of the guarantee fund for microcredit projects by almost 1.3 million euros . This fund, managed by Banca Etica and fed by the optional contribution of the subscribers of the funds Responsible Securities (0.1% of the invested capital), allowed last year to grant 45 new financing, 45% of which gave rise to initiatives enterprising

Integrated Balance Also for 2014, for the fifth consecutive year, Etica Sgr decided to write the Integrated Balance, which links the civil part with the main economic results of the company and the sustainability report carried out according to the guidelines of the “GRI – Global Reporting Initiative ” (version GRI- G4).