Ethos, the Swiss foundation for sustainable development, has set a target to reduce the CO2 emissions in its investment funds – 91.5% by 2050 – as per its newly- published climate strategy for 2022-2050.
The carbon intensity will be reduced by 34.5% by 2025, by 56% by 2030, and by 78.1% by 2040, aligning its investment funds to a global warming path well below 2°C and as close as possible to 1.5°C by 2030 at the latest, it added.
Ethos’s climate targets – approved by the members of the foundation and its shareholders at its annual general meeting last week – apply to greenhouse gas (GHG) emissions of companies held in its equity investment funds (Swiss Sustainable Equities, Equities CH Indexed Corporate Governance, Vontobel Fund Equities Swiss Mid & Small, Clartan ESG Europe Small & Mid Cap, Equities Sustainable World), and from 2023 to the Ethos Swiss Bonds and Ethos Bonds International funds, the climate strategy stated.
The foundation is taking action to cut emissions coming largely from companies in its investment funds that should in the future rely on a climate strategy and take measures to decarbonise business activities.
Ethos said that figures will be adjusted once investee companies have published their data on GHG emissions for 2021 and the data will be available to investors. It will start to calculate emissions for the bond funds once the methodology is finalised, it added.
The carbon intensity of Ethos’s funds, calculated on the assets recorded in 2021, was 209 tonnes of CO2 per million invested in 2021, up from 201 tonnes of CO2 per million invested in 2020 and down from 322 tonnes of CO2 per million invested, according to the climate strategy report.
Assets in the funds increased year-on-year from CHF1.03bn in 2019, to CHF1.50bn in 2020 and CHF2.05bn in 2021, the report added.
In particular, the carbon intensity in the Clartan ESG Europe Small & Mid Cap fund jumped from 442 tonnes of CO2 per million invested in 2020 to 1,996 tonnes of CO2 per million invested in 2021 because companies Nexans and Rexel were included in the fund, Ethos said.
The carbon intensity in the Vontobel Fund Equities Swiss Mid & Small also increased from 178 tonnes of CO2 per million invested in 2020 to 204 tonnes of CO2 per million invested in 2021.
The carbon intensity in the Swiss Sustainable Equities and Equities CH indexed Corporate Governance funds saw an uptick in 2021 to 171 tonnes of CO2 per million invested and 241 tonnes of CO2 per million invested, respectively.
In the fund Equities Sustainable World excluding Switzerland, instead, carbon intensity decreased from 465 tonnes of CO2 per million invested in 2020 to 364 tonnes of CO2 per million invested in 2021.
Ethos has also set a target of 100% by 2040 of owned companies with science-based 1.5°C reduction targets validated by an independent organisation. Currently the Vontobel fund counts only 8% of such companies, the Clartan fund 28%, the Equities Sustainable World 36% the Equities CH indexed Corporate Governance 40%, and the Swiss Sustainable Equities fund 44%.
It will intensify the engagement with companies that do not have targets validated by an independent organisation and from 2025 it will exclude the companies in the fossil fuel sectors that have not set reduction targets for their emissions validated by the Science Based Targets initiative (SBTi) or a similar organisation.
From this year Ethos will also oppose at AGMs to the re-election of chairs of sustainability committees, or board of directors if such a committee does not exist, of companies with high GHG emissions that do not have a convincing climate strategy or that have not set and validated reduction targets for their GHG emissions.
It will extend this policy to all companies from 2025.