Investment solutions Index Solutions

Index Solutions

Integrating environmental, social and corporate governance factors into operational management is not a luxury anymore, and it hasn’t been for some time now. In fact, companies that do so achieve better and more sustainable results compared to the broader market.

Already prior to the introduction of ESG as a compelling investment approach, another relevant development took place in the financial sector: indexing. Advances in technology and finance have today made it possible to create an index quickly and efficiently using virtually any criteria whatsoever, an index that can be exactly replicated in a corresponding passive fund. That index funds replicating indices based on ESG criteria have been used by investors to aid in their investment decisions is no recent phenomenon.

A wide range of indices are available today that variously weight environmental and governance-related aspects. We see them as falling into four categories:

  • Indices that focus on climate change
  • indices that base their selections on religious and ethical convictions
  • indices based on specific objectives such as the promotion of women within corporate structures
  • and diversified indices that more or less cover the entire ESG spectrum.

Credit Suisse Asset Management focuses on the last category for its investment solutions.

The MSCI indices serve as the underlying. MSCI is one of the largest and most prominent index providers in the world. The MSCI ESG Leaders indices are broadly diversified, replicate a wide array of sectors and moreover exhibit a lower tracking error relative to the respective (non-ESG) standard index.

Performance compared: traditional investments vs. sustainable investments Annualized risk and return. Data interval: 31.12.2010 to 30.06.2018
Source: MSCI Bloomberg, data as at June 30, 2018, in USD, monthly performance figures for risk calculation

Traditional investments
MSCI Emerging Markets Index

2

Return

17

Risk

Sustainable investments
MSCI Emerging Markets ESG Leaders Index

5

Return

16

Risk

Historical performance indications and financial market scenarios are no reliable indicators of future performance.