SIFEM - Swiss Investment Fund for Emerging Markets

Investing Responsibly

SIFEM invests only in funds and financial institutions that uphold high standards in environmental, social and corporate governance (ESG) and that also oblige their portfolio companies to uphold these standards. When SIFEM analyses investment opportunities, its investigations into the compliance and improvement of ESG standards carry a lot of weight. During the investment term, the fund manager is obliged to monitor closely all portfolio companies, report any incidents and submit an ESG report every year.

Interview with Sarita Bartlett, Head of ESG, Obviam about Investing Responsibly

     

What is responsible investment?

Responsible investment is an approach to investing that aims to incorporate environmental, social and governance (ESG) factors into investment decisions, to better manage risk and generate sustainable,long-term returns. ESG encompasses a wide range of issues, and many of these issues are dynamic. They include:

Environmental standards

Environmental standards include:

  • Compliance with environmental regulations
  • Sustainable use of natural resources
  • Avoiding or reducing CO2 emissions
  • Avoiding or reducing the pollution of air, water and land
  • The production of hazardous and non-hazardous waste is to be avoided

Social standards

Social standards include, by way of example:

  • No forced labor
  • No child labor
  • The payment of wages that meet or exceed industry or the legal national minima
  • The fair treatment of employees in respect to their employment and working conditions, regardless of gender, race, colour, political opinion, sexual orientation, age, religion, social or ethnic origin and/or HIV status 
  • Healthy and safe working conditions

Governance standards

Governance standards include an undertaking to:

  • Prohibit all employees from making or receiving gifts of substance in the course of business
  • Prohibit the making of payments as an improper inducement to confer preferential treatment
  • Prohibit contributions to political parties or political candidates, where these could constitute conflicts of interest
  • Properly record, report and review financial and tax information
  • Promote transparency and accountability grounded in sound business ethics
  • Clearly define responsibilities, procedures and controls with appropriate checks and balances in company management structures
  • Use effective systems of internal control and risk management

Standards for Fund Managers, Financial Institutions and Investee Companies

  • Commit to an investment policy on ESG prior to the investment from the SIFEM
  • Comply with all applicable local laws and regulations
  • Apply SIFEM’s exclusion list in selecting investee companies
  • Work over time to comply with relevant international standards
  • Assess the ESG issues of all new investments as an integral part of the investment appraisal process
  • Monitor investee companies’ performance on ESG matters. For high risk investees, external monitoring is recommended
  • Report any serious incidents immediately to SIFEM with plans for corrective actions and follow-up