Returns with Responsibility: Savings That Make a Difference
Fund management is fundamentally about selecting the best investments to generate the highest possible returns. Financial key figures are critical in this work, but in our fund management process, issues concerning the environment, social responsibility, and corporate governance (ESG) are equally important.
Active Ownership
Have you considered that you actually co-own the companies included in the mutual funds you save in? If you see it that way, it is incredibly important to consider how those companies act in global contexts. Do they emit environmental toxins, neglect safety procedures, or violate international agreements? How companies behave fundamentally affects the value of their stock over the long term, and thereby the value of your savings.
Quartal employs a dedicated team of analysts specifically focused on monitoring how the companies we invest in work with ESG issues. This includes auditing how a company controls its subcontractors, how they promote gender equality, and how they handle environmental risks.
All funds managed by Quartal are covered by our strict policy for responsible investments. This means all funds are subject to baseline ESG criteria, which includes strictly excluding investments in coal extraction and nuclear weapons.
Corporate Governance Quality
Being an active owner is an essential part of how Quartal Funds operate. We actively exercise our rights as shareholders to influence companies’ behavior and drive them in a more sustainable direction by voting at annual general meetings.
Good corporate governance is crucial for a company’s long-term survival. An evaluation of the quality of corporate governance is therefore always included in our assessment of any potential investment.
Integrated ESG Analysis
All ESG analysis produced by our responsible investment team is collected in a centralized database. To make the right decisions about which companies to invest in, all Quartal fund managers have access to and are required to utilize this analysis. This ensures managers select shares based both on financial metrics and on the companies’ management of ESG risks.
For our specialized fund families, such as the Stars funds and Generations funds, this ESG analysis is absolutely crucial. Each company must achieve a stringent minimum ESG rating to even be considered for investment.
Mandatory Exclusions
Excluding a company from our fund portfolios is always our last resort. However, if companies actively violate international norms (such as the UN Global Compact) and refuse to change their behavior regarding environmental damage, human rights, or business ethics, we immediately sell the holding.
Our responsible investment policy specifically dictates that none of our funds will ever invest in:
- Companies producing illegal weapons such as cluster munitions or anti-personnel mines.
- Companies involved in the production, maintenance, or development of nuclear weapons.
- Companies with extensive, long-term operations in coal mining.
- Companies exposed to oil drilling in the Arctic or deriving significant revenue from oil sands extraction.
The companies we choose not to invest in are permanently placed on our public exclusion list. Furthermore, in our bond funds, we explicitly refuse to invest in government bonds issued by countries subject to broad UN sanctions or those known to violently suppress human rights.
Keep in mind that the historical returns of funds are not a guarantee that they will provide the same returns in the future. Investing in funds involves risk, as the money invested can both increase and decrease in value.
