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Zurich Cantonal Bank |
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| Background | Zurich Cantonal Bank (ZKB) is the leading full service bank in the Zurich region with national stature and international connections. Its assets of CHF 80.5bn make it the largest cantonal bank and the third largest Swiss bank. In addition to its comprehensive competence in the mortgage and credit business, it has been evolving into an investment and pension bank since 1995. Today ZKB, with assets under management of CHF 74.5bn, is one of the biggest asset managers in Switzerland. As an independent public-law institute of the Canton of Zurich, the bank has a cantonal guarantee. Zurich Cantonal Bank's mandate requires it to work for the economy and people of the Canton of Zurich. A key strategic mainstay is the comprehensive provision of banking services to all segments of the population and to small and mediumsized enterprises (SMEs). Furthermore, Zurich Cantonal Bank has social mandate to promote inexpensive housing construction and projects in the areas of culture, education, nature and sports. Sustainability is an integral element of the company policy and thus is a key factor in the decisionmaking process. | ||||||||||||||
| Research | Zurich Cantonal Bank's Environmental and Social Research bases its evaluations of equities and bonds on environmental and social criteria. The sustainability analysis for companies is primarily based on the sector leader approach. Using comprehensive criteria, companies that show exceptional performance in social responsibility and environmental issues are identified in every sector worldwide. So-called sustainability innovators are also selected. These are small- and mid-cap companies which offer particularly innovative products that make a real contribution to a more sustainable society. In the bond sector, too, Zurich Cantonal Bank offers a Sustainable Investment Universe. Specific analytical approaches were developed to evaluate groups of issuers such as states/member states, cities and supranational financial institutes/special purpose banks. Broadbased information gathering First, all relevant publications, such as environmental, social and company reports, are analysed. Despite the improvement in quantity and quality, the information published by the companies is generally insufficient for a comprehensive sustainability analysis. The team acquires additional information by means of questionnaires and direct dialogue. Other sources of information include the reports and databases of specialised research providers in the US and Japan. Indepth media research is also carried out for each company. Media databases are used which cover more than 8000 sources and permit very specific searches.The acquisition of information is rounded out by contacts with nongovernmental organisations such as environmental protection groups and unions. Multilevel selection process A multilevel analysis is carried out to select the sector leaders. An initial, short analysis within the sector separates the wheat from the chaff. The remaining companies and debtors are analysed in detail, and the best are added to the Sustainable Investment Universe. Constant monitoring If a company or issuer is included in the Sustainable Investment Universe, the analysts continuously evaluate information on them. Events that could have an impact on the environmental and social rating are researched in greater detail. If the existing rating must be reconsidered, the company is placed on a watch list. The watch list procedure involves contacting the company and investigating the event. The environmental and social rating is updated regu-larly at least every two years. | ||||||||||||||
| Criteria | Exclusion criteria The exclusion criteria are screened at the beginning of the analysis. Their scope and form are defined together with the client. Sector leader The criteria which are examined in the analysis are organised into six sector specific areas. The following overview includes examples of the roughly 130 criteria from the six areas:
Bonds The analysis of countries is based on 50 environmental and social indicators relating to major environmental problems and key social issues. As far as the environment is concerned, for example, CO2 emissions, the number of endangered species and the ratification of international treaties are assessed. On the social front, topics such as human rights violations, political rights, corruption and distribution of income are evaluated. City ratings are based on environmental issues such as power, traffic or water and, in the social area, topics such as education, healthcare and poverty.The analysis of issuers in the supranational financial institutes and special purpose banks category focuses, first, on the actual financial activity and, second, on the social and environmental guidelines applied. Innovators Sustainability innovators are small to medium-capitalised companies which produce goods or provide services that create major ecological and/or social added value. We have defined five areas of activity for the selection of innovators: energy, resources, food/consumption, mobility and services. Companies are evaluated that make a substantial contribution to solving the problems related to the specific areas of activity. | ||||||||||||||
| Ranking- / Rating-System | Sector leaders Every question in the questionnaire and the six topics receive a different weighting depending on their significance. For each question, points are given for performance. The calculation of the weighting and the number of points produces an end result in the form of a percentage. This percentage is translated into a nine-level rating ranging from C to AAA. Following the company evaluation, a concise, two-page sustainability report is published which includes the rating and discusses the strengths and weaknesses of the company in the various areas. Bonds In rating countries for sustainability, a ranking is assigned based on the evaluation of a total of 50 individual indicators. A comprehensive publication on this topic also describes the rating of the various countries. If a country qualifies for inclusion in the Sustainable Investment Universe, the country's member states are included too. Ratings are also assigned for the best issuers from a sustainability standpoint in the areas of supranational financial institutes and special purpose banks, as well as for cities. | ||||||||||||||
| Quality Management | ZKB carries out the following measures to ensure the quality of its information and the evaluation process:
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| Products & services | Sustainable asset management With ZKB Sustainable Investments, Zurich Cantonal Bank offers its institutional clients investment solutions that are based on the comprehensive know-how of its Environmental and Social Research and Institutional Asset Management. Sustainable Investment Universes Zurich Cantonal Bank offers sustainable investment universes tailored to individual needs for investment funds, pension products or asset management mandates in the areas of equities and bonds. All the securities in these universes are constantly monitored and regularly reviewed. Publications Two-page sustainability reports with an integrated rating are published on sector leaders. One-page innovator profiles are available on innovators. For bonds, the results of the analyses are compiled in the compact form of one-page issuer profiles. Furthermore, a comprehensive sustainability rating has been created based on 50 indicators for the valuation of government bonds of the 30 OECD countries. The newsletter "Sustainable Investments" is published quarterly. Other services Upon request, Environmental and Social Research also carries out various other services related to the creation and distribution of sustainable investment products. This includes, for example, communication with clients (road-shows, client events), contributions for sales documents or consulting services for councils. | ||||||||||||||
| Clients | Sustainable asset management:
Sustainable investment funds:
Sustainable pension products:
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| Contact | Zurich Cantonal Bank Sustainability Research P.O. Box CH-8010 Zürich Fon: +41 (0)1 292 24 13 Fax: +41 (0)1 292 32 12 E-Mail: robert.hauser@zkb.ch |
| Web | www.zkb.ch Environmental and Social Research: www.zkb.ch/bin/home/frame/zkb/ nachhaltigkeit/produkte/umwelt_sozialresearch.html |