The nature of the Etica Impatto Clima fund means that the financial instruments known as green bonds are part of the fund’s investable universe.
Initially, green bonds came mainly from supranational financial institutions, such as the World Bank or the European Investment Bank. Then, securities issued by individual companies, countries, municipalities, and government agencies also arrived on the market.
Etica Funds Selection
Etica Funds selects these types of instruments with precision and rigour. Investment in green bonds is always permitted for the issuers within the investment universe, which is built based on the equity and bond selection method, including government securities.
For issuers outside the investment universe, investment in equities and bonds (for example in the financial sector) remains excluded, but investment in green bonds is possible if the issuer passes two checks.
We say NO to Green Bonds from issuers which, among other things:
- belong to sectors such as weapons, gambling, fossil fuels;
- use or develop nuclear energy;
- are in possession of tar sands;
- are involved in harmful practices in terms of corruption, environmental protection, and employment rights.
Etica Funds assesses the green bonds with issuers that pass the previous filter using a proprietary method, which calls for, among other things, an analysis of the second-party opinion and/or the green bond framework and an analysis of the bond issuer’s degree of reputational risk in terms of ESG issues. The Fund will only invest in bonds that pass a certain assessment threshold defined by Etica Funds. In addition, Etica also assesses green bonds while they are in the portfolio, using a proprietary framework of indicators that includes the public information provided by the issuers and the information deduced during any engagement activities.
NB: The second-party opinion is a type of “stamp” issued by various parties (e.g. ESG ratings companies, auditing firms, etc.) attesting to the “green” quality of the bond. The second-party opinion is required by the issuer at the time the bond is launched on the market. This is a non-binding opinion on the consistency with what is stated by the ICMA Principles, the Climate Bonds Initiative, or current regulations or self-regulations.
Calculating the Impact of Green Bonds
The data provided by the Impact Report make reference to the Etica Impatto Clima Fund’s portfolio at 31 December of the previous year and are the result of an internal calculation based on the information available in the most recent documentation provided by the green bond issuers, if available (for some issues the useful information is not available at the date this document is prepared).
In the report, the data on emissions savings are collected through the following steps:
- if available, the annual emissions saved per million euros invested is considered together with the ratio to Etica Impatto Clima’s investment.
- if the first figure is not available, the annual emissions saved is used, which is divided by the amount allocated, and finally the ratio to Etica Impatto Clima’s investment in euros is considered.
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Past performance does not guarantee future results.