Zurich, 15 December 2021

CEO Philipp Good reveals how he built an ESG culture and explains the firm’s new products.

responsAbility’s climate experts enter a cooperation with ESG-AM in global credit aiming to create measurable climate impact in public markets

Zurich, 15 December 2021

The clock is ticking. Confronted with unequivocal evidence of human activity’s impact on climate change, there are nine years to halve CO2 emissions and be on track for achieving net zero emissions by 2050. This urgency to act has been driving action to speed up the transition to a low-carbon economy – by governments, by corporations, and consumers. A successful transition demands a deep economic transformation, requiring the mobilization of finance on a large scale, writes the International Monetary Fund (IMF) in its newly published Global Financial Stability Report. It estimates that additional investments of up to USD 20 trillion will be required by 2050 to achieve the goal of reducing worldwide carbon emissions to net zero by the middle of this century. About 70 percent of this additional funding is expected to come from private sector sources.

The global financial sector can play a crucial role in catalysing investment and accelerating the transition. Investment management is currently experiencing a paradigm shift toward the integration of sustainability considerations, particularly climate change mitigation, into investment decisions. At the current juncture, specialised investment funds are still limited in size and scope to have a major impact, as is seen in surveys of asset managers which suggest that a lack of adequate data is a key obstacle to implementing sustainable investment strategies.

The cooperation between responsAbility and ESG-AM targets investing in corporate credit with credible decarbonization strategies focused on a long-term net-zero pathway which provide substantial CO2 emissions reductions. It combines responsAbility’s proprietary, data-informed, scalable, climate-mitigating methodology to enable measurable impact and ESG-AM’s expertise of investing in global credit.

The need to address climate risk has heightened over the last few years, and many fixed income investors respond by adopting low-carbon strategies: excluding sectors and companies with high emissions, while focusing on issuers with low carbon emissions. And new academic research suggests that such low carbon approaches slow and may not even contribute to the transition to Net Zero. Moreover, there is no evidence that excluding greenhouse gas (GHG) intense sectors has a meaningful impact on the growth trajectory of these sectors. Thus, rather than excluding sectors which are at the heart of the transition to a cleaner economy and have the highest decarbonisation potential (such as steel, cement, plastic, aviation and shipping) climate-concerned investors need to engage with these specific issuers in these sectors, as it is their progress in creating credible Net Zero strategies which will be indispensable to achieving Net Zero as a whole.

Florian Heeb, researcher at the Center for Sustainable Finance & Private Wealth, University of Zürich, and Board Member of ESG-AM: “The urgency to decarbonize requires investors to take credible action now. The current and most prevalent approach – low carbon strategies focusing on excluding of high carbon emitters in liquid markets – may not solve any problems other than making people feel good. Such strategies, which exclude high carbon emitters categorically and redirects capital to low emitting corporates, are suboptimal as they ignore reality – high emitting sectors like cement will not disappear any time soon – they increase portfolio concentration risk. At the same time, investors have a crucial role to play in the climate transition by actively encouraging companies to improve their climate performance. To limit global warming to 2°C, we need to set incentives for all companies to adopt and implement ambitious decarbonization strategies – particularly the companies that currently cause most greenhouse gas emissions. Excluding these companies from the start forgoes the opportunities created by the climate transition, both from an impact perspective and from a financial perspective.”

Stephanie Bilo, Chief Client & Investment Solutions Officer, responsAbility: “We’ve been leading the way in climate finance for many years, with climate scientists and energy specialists in-house who have created bespoke tools to measure CO2 savings in our funds. And with the demand from clients for products that deliver on Net Zero targets at scale, we are well positioned and highly motivated to drive this particular strategy forward and create impact where it is needed most.”

Philipp Good, CEO ESG-AM: “We chose this cooperation because responsAbility grounds their strategy in climate science and evidenced-based methodology to assess climaterelated risks. Combining with our profound knowledge in global credit, responsAbility was the top-tier partner to delivering on this subject.”

ESG-AM receives authorisation as manager of collective investment schemes

Zurich, 15 December 2021

FINMA approval is the prerequisite for ESG-AM to be able to operate and actively offer its services. The entire team around CEO Philipp Good is delighted that the licence has been granted, subject to a certificate of legal effect: “Thanks to the intensive preparatory work of the motivated team, we were able to keep the licensing phase extremely short, at just over five months, which makes us extremely happy. Now we are finally ready to realise our vision of a concentrated service and product offering for sustainable asset investments.”

 

Primary focus on the “E” and the “S”

 As a first step, ESG-AM will focus on a strategy in the liquid bond space that focuses on investing in the transition to a net-zero energy path.

 

ESG-AM would also like to position itself in the “S” (Social) area of ESG in the future. A strategy is envisaged that addresses the two Sustainable Development Goals (SDG) 5 “Gender Equality” and 8 “Decent Work and Economic Growth” and is based on a specially developed methodology.

 

These Article 9 funds in accordance with SFDR guidelines (Sustainable Finance Disclosure Regulation) address central problems in the field of sustainable investments: that of impact. For it is not only the sustainability champions on the market, but those companies with the greatest catch-up potential that can achieve the greatest impact.

 Increase in staff

 In order to be able to implement the ambitious product strategy, ESG-AM has also increased its personnel resources and brought on board Robert Koch, another partner and proven expert in the area of multi-asset/absolute return. After completing his Master’s degree with a focus on investment banking, entrepreneurship, mathematics and statistics, Robert Koch was the former Senior Portfolio Manager responsible for the Fisch Asset Management Absolute Return Strategy and was instrumental in establishing and expanding this area. Before that, he worked as a portfolio manager at Union Investment Austria and as a business analyst at Roland Berger Strategy Consultants in Vienna.

 

We have also created internships for young professionals with the aim of giving young people access to the topic of ESG. Philipp Good comments: “We consider it a great duty to accompany young people on their training path in the financial services industry and benefit from their commitment and passion ourselves.”

ESG-AM off to a flying start

Zurich, 22 April 2021

The founding of ESG-AM marks the arrival of a new asset manager based in Zurich. The company’s officers are currently in the process of obtaining a licence as a manager of collective assets from the Swiss regulator FINMA. ESG-AM will focus exclusively on companies committed to making a positive contribution to the environment and to society at large.

Thanks to the depth of expertise in the area of corporate credit and sustainability, institutional clients will have access to a specialised offering of products and services, once FINMA has issued the necessary licence. Here ESG-AM invests not only in companies that are sustainability champions, but equally those that qualify by having made concrete, measurable progress, as well as those able to demonstrate an explicit impact. While relying on industry partnerships for sourcing data, ESG-AM uses proprietary models and cutting-edge technology for in-house analysis.

Strong in corporate credit, strong in sustainability

“As an active and highly focused business, sustainability and yield are equally important. Our goal is to combine both value drivers to provide optimal performance,” says Philipp Good, CEO of the newly formed ESG-AM, in describing his motivation for setting up the business. As long-standing CEO and member of the executive board at Fisch Asset Management, as well as portfolio manager for strategies in the high yield, emerging markets and global corporate bonds segment, he is one of the driving forces behind the new company.

He is supported by Peter Jeggli, who after 15 years as a credit analyst at Credit Suisse and Credit Suisse First Boston, founded the research boutique Independent Credit View AG in 2003. A decade later he moved on to Fisch Asset Management, where he managed multi-award winning products in the high yield segment. As Head Credit Research, Peter has latterly been a leading  force behind the integration of sustainability criteria into investment processes.

The third founder is Ingeborg Schumacher, who provides unparalleled know-how in the field of sustainability. As an internationally recognised specialist with over 20 years’ professional experience in sustainable and responsible investing, her knowledge of existing market solutions is unrivalled. She also brings a broad network of contacts through her consulting and lecturing activity, as well as her role as board member of the Forum Nachhaltige Geldanlagen.

The last member of the management team is Marco Tognarini, a specialist with around 20 years’ experience in banking, including spells in London and Dubai. In his role as COO Private Banking for Africa & NRI he was able to build up practical experience in the themes of risk management, finance and strategy development. His last role was as joint Market Head for Sub-Sahara Africa.

Together the four company founders target an institutional client base looking to ensure their portfolios demonstrate measurable sustainable attributes and requiring bespoke, specialised investment solutions to achieve this.

A sustainable corporate culture too

ESG-AM is committed to sustainability within its own walls too, by advocating ecological balance, social justice and a high standard of governance and integrity. To this end, the company has appointed an independent board of directors to complement the founders’ expertise and oversee the company’s continuous development.

The six board members Thomas Hirsiger (Chairman, entrepreneur and CEO of various finance companies), Dr David Wyss (Vice-Chairman and former member of the management board of the Swiss regulator FINMA), Cécile Bachmann (Member and Unit Lead Public Affairs at Farner Consulting), Florian Heeb (Member and researcher at the Institute for Banking and Finance at the University of Zurich), Tonia Zimmermann (Member and founder of the fintech start-up Umushroom) and Reto Schwager (Member, entrepreneur and long-serving executive in asset management) provide a wealth of know-how and many years of experience in all the company’s core disciplines.

In addition, ESG-AM has decided to improve its own sustainability credentials, for example by donating three percent of its revenues to charitable causes and fully offsetting its carbon footprint.

©2021 ESG-AM AG